Comcast Corp. is paying $2.3 million to settle an investigation by the Federal Communications Commission into whether the company wrongfully charged customers for cable TV services and equipment that they never ordered.

The FCC said in a statement that the fine is the largest civil penalty assessed from a cable operator by the agency. At issue is a practice known as "negative option billing," where providers charge people for services or equipment that they didn't expressly ask for. Such billing is prohibited under the FCC's rules, as it places the burden on the customers to call their providers to dispute charges and ask for refunds.

As part of the settlement, Comcast will have to implement a five-year compliance plan to adopt ways to make sure consumers consent to new services or equipment before charging them—including by sending customers order confirmations separate from bills.

To be sure, the fine is small in comparison to other such penalties the government has levied in recent years against phone companies. AT&T in 2014 agreed to pay $105 million to settle so-called mobile "cramming" charges, the practice of charging subscribers for services they didn't order.

T-Mobile that year settled with the Federal Trade Commission to pay at least $90 million on a similar issue.

In a statement, Comcast acknowledged that "in the past, our customer service should have been better and our bills clearer, and that customers have at times been unnecessarily frustrated or confused."

However, the company noted that the two-year investigation found "no problematic policy or intentional wrongdoing, but just isolated errors or customer confusion." Comcast said it agrees that those issues need to be fixed but doesn't agree with the FCC's legal theory to levy a fine as a result of the errors.

Since last year, the cable operator has put an increased focus on enhancing its customer service operations, and it said that many of the changes the FCC has asked for are already well under way.

The FCC was tipped off to the issue by numerous consumers who alleged that Comcast had added charges to their bills for items like premium channels, set-top boxes or digital video recorders that they never ordered or, in some cases, specifically had declined. Consumers said that they spent "significant time and energy" attempting to remove the unauthorized charges from their bills, according to the FCC.

"It is basic that a cable bill should include charges only for services and equipment ordered by the customer—nothing more and nothing less," said Travis LeBlanc, chief of the FCC's enforcement bureau.

Separately, Comcast came under fire from consumers on Tuesday when it experienced a "hardware issue" early in the morning that resulted in voice, video and internet service outages in several markets across the country.

Comcast said the outage, which lasted a few hours, affected a "subset of customers" in markets including Texas, California, Washington, Oregon, Colorado and Georgia. During that time, people may have also had difficulty reaching Comcast's customer service by phone. The company said its engineers "identified and resolved the issue, and the services are returning to normal."

Several consumers took to Twitter Tuesday morning to complain. One Twitter user, @Late2TheParty11, was annoyed at having a Netflix session interrupted. "Almost done with #LukeCage and the rapture decided to come for #xfinity across the country. Thanks #comcast. #OUTAGE."

"We appreciate our customers' patience as we worked to fix this and are sorry that we inconvenienced them," Comcast said.

Write to Shalini Ramachandran at shalini.ramachandran@wsj.com

 

(END) Dow Jones Newswires

October 11, 2016 14:05 ET (18:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
Netflix (NASDAQ:NFLX)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more Netflix Charts.
Netflix (NASDAQ:NFLX)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Netflix Charts.