McCaskill, Senate subcommittee go after cable companies for overcharging customers

Charter Communications and Time Warner Cable, two of the largest pay-television companies in the nation, overcharged customers for equipment and pocketed the money, a U.S. Senate investigation has found.

But Charter officials said the overcharges were accidental, affected less than 1 percent of customers, and steps have been taken to address the problem.

U.S. Sen. Claire McCaskill, D-Mo., discussed the findings in a conference call with reporters Thursday after a Senate hearing in Washington, D.C., earlier in the day.

The Senate’s permanent subcommittee on investigations heard from officials of five of the nation’s largest pay-TV providers: Charter, Comcast, Time Warner, AT&T’s DirecTV and Dish Network. Those companies provide television services to more than 70 million subscribers, representing more than half of all American households and more than 70 percent of households with pay-TV service, the senator said.

The Senate committee spent 13 months digging into pay-TV practices.

“We learned in our investigation that consumers don’t get clear information about what they are paying for and why,” she said. “Many times, they are overcharged, and those charges are never refunded.”

“In Missouri alone last year, over half a million dollars was pocketed by the cable companies in overcharges without them making an effort to refund the money to customers,” McCaskill said.

According to the Senate committee’s report, Charter estimates it overcharged approximately 5,897 Missouri customers, amounting to an annual overcharge of $494,000.

Time Warner Cable estimated in 2015, it overbilled Missouri customers by $44,152, the subcommittee report states.

Time Warner Cable and Charter Communications recently merged.

Kathleen Mayo, executive vice president of customer operations at Charter, said a company audit found the vast majority of customers were not overcharged.

Those who were overcharged will receive a one-year credit, she told senators. Charter also has implemented internal controls to prevent future overcharges.

John Keib, former executive vice president of Time Warner, said most of the company’s cable customers were satisfied with the service. In addition, Time Warner has promised to provide an automatic one-month credit to anyone who is identified in its audits as having been overcharged.

In a written report, McCaskill outlined problems with pay-TV billing practices.

“One common complaint leveled against cable and satellite providers was that they did not adequately disclose the price of their service in advertising or at the point of sale,” according to the report.

The Democratic senator told reporters consumers in many cases were not told clearly what monthly service rates would be charged once a promotional rate ended. In addition, in some cases, customers had to call to cancel a particular service or wind up being continually charged for a level of service they didn’t want, she said.

Pay-TV companies also included some charges in the section of their bills listing taxes “to give consumers the impression that these are government fees, when in reality, it is just a different way for them to charge customers for programming,” McCaskill said.

In addition, companies have established new fees, such as broadcast television and regional sports network fees, to cover programming that historically was included in the price of a customer’s programming package.

She contended many of the “bait-and-switch” issues involving pay-TV stem from the lack of regulations on the state and local level.

“There really has not been enough attention paid to this from a consumer-protection standpoint,” she said.

But Mayo told senators Charter Communications has made major improvements in customer service since 2012, hiring additional staff and relocating customer-service jobs from overseas back to the United States.

Charter, which has invested $7 billion in network improvements over the past four years, has seen a 25 percent decrease in customer-service calls, she said.

McCaskill said the pay-TV industry lobbied unsuccessfully to derail the investigation and prevent the Senate hearing, however.

Senators plan to look into pay-TV programming costs, some of which have risen by as much as 33 percent.

A hearing is expected this fall, McCaskill said.

“I know I have talked to a lot of constituents who have complained about how many channels they have to pay for that they don’t watch. I want to get to the bottom of how these programming costs work,” she said.

McCaskill said she is uncertain whether Congress will pass any legislation to address the pay-TV issues, but she maintained the investigation already has made a difference.

“I am pretty confident that most Missourians can save on their cable and satellite TV bills if they will take a few minutes to look at the report and arm themselves with information to call their provider and insist on a lower rate,” she said.

mbliss@semissourian.com

(573) 388-3641

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Read the online report

Read Sen. Claire McCaskill’s pay-TV investigation report online at www.mccaskill.senate.gov/pay-tv.