Comcast Fined $2.3 Million by FCC For 'Negative Option Billing' Practices (arstechnica.com) 116
An anonymous reader shares an ArsTechnica report:The FCC announced a $2.3 million fine against Comcast on Tuesday after confirming that the company had been billing customers for products and services they had never ordered. After calling the fine "the largest civil penalty assessed from a cable operator by the FCC," the federal agency's announcement detailed exactly how Comcast bilked customers -- and new company practices that must be put into place as a result. According to the FCC's Office of Media Relations, the agency had received "numerous complaints from consumers" about the issue of "negative option billing" -- meaning, receiving charges for items that the customers had never affirmatively requested. (The FCC reminds readers that in the telecom world, this practice is known as "cramming.") The listed complaints revolve specifically around items related to cable TV service, including "premium channels, set-top boxes, and DVRs."
2.3M? -- That'll teach them! (Score:1)
That's pocket change to that company.... They won't change a thing.
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More importantly, it is likely a miniscule amount compared to what they actually stole. So no real consequences for them. Crime does pay.
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Exactly. Screw the fine. They should have to refund 2.5x everyone who files a claim with the FCC. Only requirement for people to get a refund is sign under penalty of perjury that they did not request the services.
And in order to stop further abuses, CEO/other executives must sign under penalty of perjury that their company has stopped this practice and will not do this in the future. If it happens again, executives all get prosecuted for lying under oath. Problem solved.
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I singed up for a service advertised at 39.95 my bill is 52.95 why?
Simple: fraud.
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Or they'll spend 2.3 Billion on lobbyists to get the FCC dismantled and replaced with a unregulated market.
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See, I disagree. I think the $2.3million dollar fine is appropriate for the crime, especially since it's basically also a warning that if the company keeps doing that sort of thing they're liable to receive even stiffer penalties. But I'd not really be comfortable with the government grabbing billions of dollars to stuff into their own coffers
What /isn't/ okay is that Comcast gets to keep its ill-gotten gains. I mean, if I stole something, I wouldn't just get a penalty (fine, jail-time, community service, w
Not One Fucking Word about Refunds (Score:2)
No mention of forcing Comcast to provide full refunds to everyone they defrauded.
That's pretty much how it works these days. A company is caught with it's hands in the cookie jar, get's time out, but gets to keep the cookies.
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Actually, the Feds and the company split the cookies.
Re:2.3M? -- That'll teach them! (Score:5, Interesting)
True - wish that "M" was a "B", which would damned sure get their attention...
Seriously, when a corporation gets over a certain size (in terms of market cap/cash on hand/etc), they really should jack the fines up by at least an order of magnitude, if only to prevent the 'fines are the cost of doing business' tactic.
Crippling a company that way has a bonus... the CxO suite is no longer praised for jacking value by any means necessary, but instead tarred and feathered (and likely sued into oblivion) by pissed-off shareholders who just saw their investment go to shit overnight.
Prosecute instead of making deals every time (Score:3)
Like most of the petty "fines" the FTC have been crowing about about the last few years, this is a consent decree - Comcast AGREED to pay $2.3 million.
A consent decree / plea bargain can make sense if the prosecuting agency and the defendant agree to a reasonable penalty, but since the current FTC never prosecutes these cases, Comcast knows they can offer peanuts and the FTC will take it. If the adminsitration would say "no" to a deal once in a while and get verdicts for $20 billion, they'd be able to get
Agreed, All the profits + (Score:3)
I think they should estimate all the profits they made on the violation, and THEN levy a fine on top of that. There is no way a company should profit from criminal actions. If that happened and the company actually LOST money, the stockholders would take care of the CxO's/boardmembers in a fashion that would really be a punishment to them, via the pocketbook. It would lead to a tying of bonuses and golden parachutes to actual company performance.
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That's pocket change to that company.... They won't change a thing.
This fine is pocket change to the federosaurus also. The FDA fined Google half a billion dollars for the crime of letting Canadian pharmacies use its advertising system to give Americans the idea that everybody else in the world pays a fraction of what we do to get their prescriptions filled.. Meanwhile Comcast gets to screw its customers blind for years and pay...$2.3 million?
That isn't even a slip on the wrist. It's massaging Comcast's wrists at a day spa.
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They probably spend that much each year on their executive retreats in Cancun.
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The Koch brothers also donated heavily to democrats, yet they are firmly labeled here as conservatives.
https://www.opensecrets.org/or... [opensecrets.org]
http://usuncut.com/politics/de... [usuncut.com]
http://www.nationalcenter.org/... [nationalcenter.org]
Re: $2.3m dollars... (Score:2)
The key concept here is that the money wasn't donated in the hopes that that party would win an election, or that the doners agree with that party's beliefs. It's bribe money, pure and simple.
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CEO is democrat means nothing whatsoever as far as the relevant politics goes. A binary left vs right, democrat vs republican, or liberal vs conservative is simplistic kindergarten style of thinking. Companies give campaign donations to help out their own bottom line regardless of how they feel about other political issues. This is why they shotgun the money to whoever is on the relevant committees regardless of the party.
At least as far as using the corporation's money. The CEOs may donate their own pe
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Total load of bullshit
Somewhere, in a dark smokey room, Democrats are laughing their asses off that you keep buying their spin. Both parties are corrupt as hell, but Comcast in particular is in bed with Democrats. Your own link says this. But let's add this:
How Comcast Bought the Democratic Party [nationalreview.com]
Lots of good reading [freebeacon.com]
Forget the paltry $50k or $100k donated directly, let's examine the *millions* raised by Comcast for Obama and the DNC, and the "Comcast Foundataion" (sound familiar?) that channels donations to the needy as
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Citation, please.
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Validating the old saying "Better to ask forgiveness than approval."
They earn that in 16 minutes (Score:5, Informative)
Comcast had $19.269 billion in revenues last quarter. (Source [cmcsa.com]) This equates to about $211 million per day or $8.8 million per hour. They'll earn back the $2.3 million fine in about 15 minutes and 42 seconds.
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This is always my first thought whenever I hear "biggest fine ever". A common reaction is jail time for those involved but I think a better deterrent would just be to make the fine something like 50x the profits generated. That way we don't have to pay for an expensive trial (and it will be much more expensive than the fine if an executive is involved) or whatever jail time. Instead, regulatory agencies will finally have sufficient funding to enforce existing rules, victims get a nice payout and those respo
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It should absolutely be punitive. It's downright stupid to give pathetic fines when the profits from the scam were likely to exceed the amount. There is absolutely no disincentive for other companies to stop doing similar practices, possibly even after they're caught.
My wife had to call Comcast twice for them trying this on her while she was in college. Fortunately she was the one paying the bill and she watched it like a hawk. This was two years ago.
Given that this practice has been going on for years. Do
Re:They earn that in 16 minutes (Score:4, Insightful)
Posting as AC because I'm at work.
When looking at this in greater detail its even worse than you pointed out. I make about 50k a year, so lets proportion this out to an equivalent number:
2.3 Million / 19.269 Billion * 50,000 = $5.97
2 Million sounds big, because to the majority of us it *is* big - but to these large companies that's the same as buying a coffee and doughnut at the Tim Horton's! If this were me I wouldn't care one bit, I'd just pay my six bucks and call it a day. Now if they were hit with an equivalent to a $2,500 fine, which is a common amount for us commoners to pay, I'm betting they'd think twice about pulling these kinds of things because they'd be out 963,450,000.00!
Of course in today's world where lobbyists have bribed those in power, a fine like that would never fly.
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Revenues are used only by deceptive politicians to describe a business's position. A business with $20 billion of revenues and an 8% profit margin has $1.6 billion of profitability, and that's its real income. Granted, that's still large; but keep your head out of your ass, at least.
Think about it. If businesses actually paid wages, their bank accounts would run out and they'd fold. A person works in part of a production process to provide a product or service; that person's effort goes into some num
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Actually, in much of the US the judge will take financial hardship into account for most fines, assuming that you are otherwise an upstanding individual. On some occasion, fines of thousands of dollars have been reduced to $50 or even $1. The exception is the IRS, because they are out for blood.
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sorry, but that 8% profit margin is after the fat cats are paid. guess again
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No, was not referring to taxes nor money to anyone external to the company
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You don't know how p/l statements are made? salaries are expenses. Income minus expenses equals profit. you're welcome
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sorry, but that 8% profit margin is after the fat cats are paid.
It is after the employees, managers, and bondholders are paid, but before shareholders are paid.
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Most business executives are making very little per employee. For example, Michael Cavanagh takes home $262 per employee per year. If all employees were minimum wage, he'd be taking home 1.62% of Comcast's direct wage costs (i.e. $40 million out of $2,219 million); salaries range from $14/hr ($28k) to $140,000/year (software engineers). That means Comcast's CFO takes home far less than 1% of all wages, which itself makes up for only a fraction of Comcast's operating expenses (rent (land, tower, antenna,
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If a $36,000/year worker is paid from revenue *and* you call revenue "income", taxing the business for it, then that $36,000/year worker actually costs $60,000/year (40% business income tax). Why? Because to pay his $36,000 wage *plus* the tax on that wage, you have to collect $60,000, pay 40% in taxes ($24,000), and then give the rest to the worker--who then also pays taxes on it.
The business does not pay taxes on revenue - they pay it on profits. The $36,000/year is an expense and it's not part of the profit and not taxed. The employee, however, will pay tax on their income and lose a certain amount of that money depending on their tax bracket.
Maybe you said that, maybe you didn't - it's not easy to tell. But in the case of cable companies, they're granted a virtual monopoly in most markets. Cutting deeply into profits means they're still ahead - even the CEO's wage is an expen
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That was the whole point. Someone wanted to talk about the business's revenue as a measure of how much money it has coming in; revenue isn't income except in an accounting sense. From a tax sense and from the sense of how much money a business is making, profits are income. Using different domains or different concepts to try to make a statement about something is an equivocation fallacy.
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The business does not pay taxes on revenue - they pay it on profits.
Measure 97 currently on the fall ballot in Oregon will tax some businesses 2.5% on sales, not profit.
The $36,000/year is an expense and it's not part of the profit and not taxed.
From here: [accountingcoach.com]
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Measure 97 currently on the fall ballot in Oregon will tax some businesses 2.5% on sales, not profit.
And until that passes, it's still not the case anywhere. And Oregon has no sales tax. This is a way of sneaking in a sales tax through the back door.
Four of those are "taxes" by name and are not calculated based on profits but on the expense of paying an employee. They are, indeed, employer-paid taxes on the money paid to employees.
But these are not income taxes, so don't equate them as such - it has nothing at all to do with the profit of the business, only the amount chosen to pay. That's already accounted for when you pick a hiring wage of $36,000.
They may have a defacto monopoly, but it was not granted to them, is is based on economic factors.
Cable? They tend to have exclusivity clauses in their franchise agreements with municipalities. They are more than a defacto monopoly.
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But these are not income taxes, so don't equate them as such -
I didn't. I simply pointed out that that $36,000 paid to an employee is an expense that IS TAXED. Nothing in what I quoted said it was an income tax.
it has nothing at all to do with the profit of the business, only the amount chosen to pay.
Uhhh, what? Any tax paid to the government is a reduction in the amount available for profit, whether it is an income tax or tax on the expenses.
Cable? They tend to have exclusivity clauses in their franchise agreements with municipalities.
No, they do not. Exclusive franchise agreements are against federal law. If you actually take time to read a franchise agreement, and the ordinances behind them, they will be explicit in saying they are non-exclusive.
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Just a bit of googling shows in 2015 Comcast had revenue of $74.5B and a net income of $16B with $8.9B cash on hand...
The purpose of a fine that would yield criminal charges were the actions performed by an individual should be to inflict severe pain such that most of the CxO level executives are fired and sued into oblivion by stock holders and make these dirt bags so toxic they never work at the executive level again. Fines should also be doubled or trebled on government sanctioned monopolies. A fine of
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Yeah, I misread "last quarter" as "last year" from the OP; but the point still stands: net income is the number we're looking for, not revenue. Hollywood aside, revenue is meaningless in this context.
You seem to have missed my point that a market without robust competition will necessarily lose jobs if one of the few major players in an oligarchy (especially a regional one) gets a big financial hit like a fine. That is to say: robust competition lets you sue a business out of existence and shift the
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You seem to be confusing Comcast with some other business. Comcast is a state sponsored MONOPOLY. Furthermore, it is a utility, meaning most people need the service as a basic function of daily life. The reality is that Comcast could go chapter 7 (bankrupt and its assets sold off) and yes, there would be some churn and turbulence, but those assets would be bought up by investors and we would probably get 6 or more smaller cable TV companies. The net number of employees might go down a little, but not ma
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People don't need cable TV; a lot of people are ditching cable TV; Satellite TV and Verizon's new TV services are competing; and they don't overlap in all markets.
Internet is the utility; however, it's still an oligopoly, since you can get FiOS or Cable in many places.
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I suppose it depends on where you live, but I suspect if you live outside of a large city, FiOS is not a realistic option (check the map). Again, if you live too far away, the same is true for DSL, so you are left with the cable monopoly.
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Re:They earn that in 16 minutes (Score:5, Insightful)
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The more important question that should be being asked is "How much did they make from the practice of cramming?"
And since TFA doesn't answer that question, another question that should be asked is why this journalist shouldn't be fired for incompetence.
Re:They earn that in 16 minutes (Score:4, Insightful)
If only the world worked that way... and corporations were actually penalized due to this sort of thing.
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Comcast had $19.269 billion in revenues last quarter... They'll earn back the $2.3 million fine in about 15 minutes and 42 seconds.
Revenue != Earnings.
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Subtracting operating expenses, Comcast had a EBIT of $16 billion in 2015 [wikipedia.org]. That works out to $43.8 million/day. And the
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Likely the maximum that the FCC can fine the company. The NHTSA is another agency that was hampered with petty maximum fines, until the DoJ stepped in with a wire fraud criminal lawsuit [wsj.com] that resulted in far stiffer penalties. "Cramming" could very well constitute wire fraud.
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It doesn't matter if it's revenue or profit if it's stolen.
Alternatively, "income" is the same for everyone regardless of whether you call it "profit" or disposable income in the end.
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I live in a well-populated area and we have only two choices, and they both suck. One pulls billing tricks similar to TFA, the other has unreliable technology (flaky connections).
I was so happy when a 3rd player announced they were available in our area, but then they got bought out by one of the first two.
Historically, oligopolies usually suck. Competition makes a big difference, and insufficient competition almost always leads to
I am Jack's complete lack of surprise. (Score:2)
This just in: Cable company becomes desperate in the face of wide abandonment. Film at 11.
I have a contract with the same company only because of my Internet service. It seemed worth the extra few bucks to get TV tacked on just because. No. The fees and rate increases since have vastly amplified the monthly bill.
In my neck of the woods, we don't have Google Fiber (yet), but we do have UTOPIAnet (Wasatch Front in Utah, for the record). Even with the cost of the FTTP gear, a 100/100mbit connection is st
Fraud (Score:5, Insightful)
Outside of the telecom industry this is called fraud, and should result in jail time for those who are responsible.
Comcast and its ilk own too many congressmen, so they have to pay back a small percentage of the profits if they get caught. Usually no admission of guilt is even needed.
Carry on, business as usual.
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It's still fraud, but if you want the fraud prosecuted, you need each case handled individually. You can't even do a class action, because each is a separate instance, and the actions aren't identical. So each defrauded customer would need to get their local police interested.
Good luck with that.
I agree that the fine is massively too small, but it should make it easier for any prosecution that is actually attempted.
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It's still fraud
Not likely. Not all deceptive practices are fraud. There was probably something in the fine print of the contract that allowed them to cram. It is deceptive, and unethical, but not fraudulent.
Yay! Vindicated! (Score:2)
I agree it's not much money for a big company but at least they're getting a good public flogging.
Public flogging worthless (Score:2)
Does public flogging even accomplish anything anymore?
Really, about the only "public flogging" I've seen accomplish anything in recent memory might have been Mel Gibson's anti-Semitic rants and Trump's pussy grabbing comments (but ONLY the pussy grabbing).
It sure seems like everyone else just gets away with whatever they did. Puny fines, some half-hearted yelling by a congressional committee, and no prosecutions of any kind. Whether it's Hillary or big corporations like Wells Fargo, they do what they do
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Does public flogging even accomplish anything anymore?
A figurative flogging may not, but a literal flogging likely would. Singapore flogs criminals, with a rattan cane dipped in alcohol, and they have very low crime rates, and an incarceration rate less than a third of America's.
The real question (Score:1)
How much did Comcast earn from this evil behavior? Was it more than $2.3 million? Then why shouldn't they do it again?
When you reward a behavior you get more of it.
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Repetition of the same behavior would, most likely, personally offend some powerful people who will no longer want to play with you. The fines get bigger and ridiculous shit like investigations and audits start happening until it's clearly established who has the power position in this relationship.
I can confirm (Score:1)
My elderly mother complains to Comcast (and me) that they charge her for on-demand shows that she has not ordered. Like the Ultimate Fighting Championship.
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Common (Score:1)
Another big telecom did this to us also multiple times. I suspect it's rampant in the industry(s) because nobody with authority is monitoring.
If a customer detects it on their bill, the company just says, "Oh, we're sorry, we must have misunderstood your prior call. We thought you asked for our deluxe roach-chewing-cable-wires insurance policy."
Coincidentally, their "misunderstanding" always benefits them, NOT us.
Criminal (Score:2)
$2.3m fine vs profit from cramming (Score:2)
The bottom line is that Comcast has very little incentive to do the right thing until it is coerced. They are always publicly stating how they are working to improve customer experience and customer service. The former is true. They are indeed working diligently to make it easier to make incremental purchases on things like Video on Demand. That interface is smooth and polished and it is in their financial best interest to make it so. The latter is debatable. Comcast is no longer the MOST hated consumer bra
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I refuse everything when Comcast calls me, I'll even refuse to speak English if it can get me off the call faster. Even vague responses can be kind of dangerous with these guys. Anything except "die in a fire" is considered consent with them.
I used to have a ton of problems with the local newspaper signing me up for subscriptions if I didn't respond to their phone call with a written request to terminate any subscription, delivery, or offer that they think they might have with me. Luckily the newspaper busi
One solution (Score:4, Interesting)
https://sillyutility.net/ [sillyutility.net] -- Compare your Comcast bill with others in your ZIP code to see if they are charging too much. Just launched today. It is mostly for the Philadelphia market but actually it works anywhere in the US.
Funny though, this actually just launched today.
isn't that a bit too low? (Score:1)
Corp versus Individual penalities (Score:2)
If an individual commits fraud, the civil and criminal penalties are typically many times more than the profit they made from the fraud.
If a corporation commits what is essentially a type of fraud, the penalties are some fraction of a percent of the profit they made.
Seems fair, right?
.0000370967 of comcast annual sales (Score:2)
make them pay more than they made! (Score:1)
I think that when a company does something like this, the fine should be 2-5 times the amount of money they made... That would make them much less interested in doing something that is clearly wrong.
I doubt very much that the tiny fine they have to pay even comes close to how much money they made.
Why does the government keep the money? (Score:1)