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Time Warner Cable faces lawsuits over cable modem fee

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Time Warner Cable was socked Tuesday with two class-action lawsuits to stop a policy that slapped customers who have its cable modems this fall with a $3.95 monthly rental fee.

Filed in Manhattan and Fort Lee, N.J., the dual lawsuit accuses the nation’s second largest cable provider of violating its own customer contracts, along with consumer fraud laws in New York and New Jersey.

A statement released Tuesday by the law firms that filed the suits claims the cable provider is bilking customers who are “leasing old modems that the company typically wrote off as worthless years ago.” Before the policy took effect Oct. 15, modems were included free of charge for customers who subscribed to plans with the cable franchise, which has more than 15 million customers in 28 states.

“It’s a massive high-tech consumer fraud accomplished by low-tech methods,” said Steven L. Wittels, the lead attorney for the lawsuit, in a statement. While Time Warner sent postcards to notify its customers of the rental charge, the joint lawsuit alleges it failed to comply with a mandatory 30-day notice period before the policy took effect. The official complaint alleges the provider “began billing for the fee just days after sending out the postcard.”

“Send customers confusing notice of the fee in a junk-mail postcard they’ll throw away in the garbage, sock them with a $500 million-a-year rate hike, then announce on your website that customer satisfaction is your number one priority. That’s some way to deliver satisfaction,” said Mr. Wittels, a senior partner for Sanford, Wittels & Heisler in Washington, D.C.

The complaint says Time Warner made its postcard notice “deceptively unclear” because it knew the average customer wouldn’t have enough time to have questions answered before the bill took effect, and likely would find buying his own modem too much work. It also accuses the company of “taking advantage of the disabled, elderly and other non-tech savvy persons who were left with no realistic option but to pony up.”

The postcards advised customers seeking to avoid the fee to buy their own modems instead, referring them to a list of approved devices available on its website. But according to lawyers, modems listed on the site are more expensive than those offered by Time Warner. The cable provider also failed to note that none of the modems is compatible with its “triple play” service; if subscribers to that plan switched cable modems, they’d lose phone service but keep cable and Internet.

The modem charge will yield an additional $40 million a month for Time Warner, which raked in $19.7 billion in 2011. The cable franchise previously has said the policy was made to keep pace with the rising cost of free repair services for customers with modems.

Time Warner Central New York region spokeswoman Stephanie Salanger declined to comment Wednesday about the lawsuit.

New York City attorney Richard A. Roth, the Roth Law Firm’s founder, said Wednesday the state attorney general’s office will probably investigate the cable provider’s policy as a case of consumer fraud.

“I wouldn’t be surprised if the office gets involved,” Mr. Roth said. “They sent out these nondescript postcards to inform customers, and that’s in violation of consumer protection agreements and the cable provider’s own agreements. If in fact it’s true, (the state) may insist that Time Warner Cable change the policy and not charge customers. They have wide latitude and can do just about anything to right the wrong.”

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