By Alexandra Burlacu | Nov 15, 2012 12:47 PM EST
Time Warner Cable (TWC), the nation's second-largest cable company, has been hit with two class action suits over its $3.95 modem rental fee.
Back in October, Time Warner Cable managed to step on the toes of most of its customers when it announced it was adding a $3.95 modem rental fee to their already inflated bills. Despite being angry at first, however, most customers quickly moved on and accepted the situation. Most of them, anyway.
According to the New York Daily News, two class action lawsuits were brought against the company on Tuesday, Nov. 13, in New York and New Jersey, accusing Time Warner Cable of "high-tech consumer fraud."
In papers filed in the New York and New Jersey courts, angered customers argued that the modem rental fee is illegal because it was not included in existing customer agreement, and the company did not give the mandatory 30-day notice. Instead, Time Warner Cable simply notified its customers with a "paltry postcard."
"It's just a scam to increase revenue," said Steven Wittels, one of the lawyers in the case.
The $3.95 modem rental fee took effect on Oct. 15, and will generate roughly $40 million per month and more than $500 per year for the $19.7 billion cable company. Time Warner Cable said it planned to use the funds to improve its infrastructure and services.
The two class action suits brought against the company ask the courts in both states to issue an injunction to block Time Warner Cable from imposing the fee. In response, TWC warned customers that they could buy their own modems, but they could only use approved ones, i.e. more expensive Motorola devices, show the court papers.
The lawyers, meanwhile, argued that Time Warner failed to mention that none of the alternative devices are able to handle the company's "triple play" service. This means that customers can use another modem only if they give up phone service and keep just internet and cable.
"You can't do this to the little guy," argued attorney Richard Roth, adding that the fee was a breach of TWC's customer contracts and was plain consumer fraud.
According to court papers, TWC's customers are being forced to make lease payments on mostly old modems that the company "typically wrote off as worthless years ago." Before the new fee took effect on Oct. 15, those modems were included for free as part of the basic service package that came along with the subscription to the cable company.
Time Warner spokesman Alex Dudley said the cable company had no comment on the litigation.
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