Time Warner Cable to Pay $1.9 Million Penalty for Violating the Risk-Based Pricing Rule

Washington, DC - Time Warner Cable, Inc. has agreed to settle Federal Trade Commission charges that the company violated the Risk-Based Pricing Rule, which requires creditors to give notice to consumers who are provided less favorable credit terms based on information in their credit reports.

The settlement marks the first enforcement case the agency has brought since finalizing its amended Risk-Based Pricing Rule in 2011. The proposed settlement requires Time Warner Cable to pay a $1.9 million civil penalty and prohibits the company from violating the Rule in the future.

“Consumers have the right to know if they are paying more for something because of information in their credit report,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “Getting this notice gives you a right to a free copy of your report, so you can make sure everything on it is correct. Some of Time Warner Cable’s customers were missing out on this important right.”

Time Warner Cable provides video, high-speed data, digital telephony, and other services to consumers in 29 states nationwide. According to the FTC, the company gets prospective customers’ credit reports to evaluate whether they qualify for service.

If the credit report contains negative information, Time Warner Cable may require the consumer to pay a deposit or pre-pay the first month’s bill. Consumers with more favorable credit histories are not required to pay a deposit or the first month’s bill. The FTC’s complaint  alleges that Time Warner Cable failed to provide the required risk-based pricing notices to consumers beginning in January of 2011 and continuing until at least March of 2013.

In addition to the $1.9 million civil penalty, the order settling the FTC’s charges permanently prohibits Time Warner Cable from failing to provide consumers with a risk-based pricing notice whenever the company uses a credit report in connection with an application grant, extension, or any other provision of credit that is primarily for personal, family, or household purposes, and based on the credit report, the company grants, extends, or otherwise provides credit to that consumer on material terms that are less-favorable than the most favorable terms available to most consumers through the company.

In addition, the order requires that, in each risk-based pricing notice, Time Warner Cable provide other statements explaining details about credit reports, credit terms and consumers’ rights under the Rule.

Information for Businesses

The FTC has new information to help businesses comply with the rule on risk-based pricing, as well as a business blog, “Risky Business,” posted on its website.

The Commission vote approving the referral of the complaint and a proposed consent in settlement of the court action to the Department of Justice was 4-0. The complaint and proposed consent were filed in the U.S. District Court for the Southern District of New York on December 19, 2013, against TWC Cable, Inc. The proposed consent decree is subject to court approval.

Additional information