Comcast Fined $2.3 Million by FCC For 'Negative Option Billing' Practices (arstechnica.com)

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."

Comments

They earn that in 16 minutes

[Jason Levine]

Comcast had $19.269 billion in revenues last quarter. (Source) 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.

Re:They earn that in 16 minutes

[CaptainLard]

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 responsible will immediately be fired and toxic in their line of work so they'll never be able to do it again.

Re:They earn that in 16 minutes

[Anonymous Coward]

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.

Re:They earn that in 16 minutes

[Nethemas the Great]

The more important question that should be being asked is "How much did they make from the practice of cramming?" If the answer is "less than what they were fined"--which it almost certainly is--then they have no motivation to alter their practices. This fine is nothing but whitewash to mollify some grumpy petitioners.

Re:They earn that in 16 minutes

[ausekilis]

I love to see part of the fine be reimbursing all those effected by this practice. If I can receive a bill (or credit) months after I discontinue service from them, they can certainly send me a check for whatever money they took from me due to this shitty business practice.

If only the world worked that way... and corporations were actually penalized due to this sort of thing.

Re:They earn that in 16 minutes

[omnichad]

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 expense before profits. Raising prices in response is only to "punish" the economy that fined them and keep their profits the same and reward shareholders (if applicable) for allowing the mismanagement.

Fraud

[Moof123]

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.

Re:2.3M? -- That'll teach them!

[jedidiah]

More importantly, it is likely a miniscule amount compared to what they actually stole. So no real consequences for them. Crime does pay.

Re:2.3M? -- That'll teach them!

[Penguinisto]

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

[raymorris]

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 negotiate consent decrees for $2 billion.

One solution

[fulldecent]

https://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.

Re:2.3M? -- That'll teach them!

[Applehu Akbar]

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.

Agreed, All the profits +

[Archfeld]

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.