ALBANY, N.Y. -- New York Attorney General Eric Schneiderman announced that his office has reached a settlement with Time Warner Cable after a two-year investigation found that the company overcharged subscribers in 10 upstate towns and villages. The settlement requires Time Warner Cable to pay $2.2 million in refunds to 18,437 customers and stop charging subscribers’ fees that exceed the amounts permitted under their municipalities’ franchise agreements. As part of the agreement, Time Warner Cable also agreed to pay $200,000 in fees and costs to the State of New York.

The settlement requires Time Warner Cable to refund overcharges collected since March 2007, with interest, to current subscribers in the Towns of Glenville, Livonia, Stafford, Oakfield, Geneva, Thompson, Lima, Batavia and the Villages of Waterloo and Ellenville.

“For too long, Time Warner Cable has been overcharging fees to its customers in direct violation of their local franchise contracts. This agreement brings millions of dollars in refunds to upstate consumers who overpaid their bills,” Schneiderman said. “Many New York families operate on a tight budget and every dollar counts. My office will not tolerate cable companies that ignore their contractual obligations and overcharge New York subscribers.”

Time Warner Cable’s billing practices were brought to the Attorney General’s attention by the Town of Glenville in January 2011. The Attorney General began a two-year investigation which found that Time Warner Cable had in fact been overcharging Glenville residents for many years, and that Time Warner Cable had been improperly charging consumers in other upstate communities with franchise agreements that Time Warner Cable had acquired from Cablevision in 1995. Although Time Warner Cable stopped overcharging franchise fees to consumers and voluntarily made $1.4 million in refunds to subscribers in eight towns in 2007 and 2010, it continued to overcharge consumers in the 10 towns and villages covered by this particular agreement, Schneiderman’s office said.

Some of the franchise agreements at issue limited the fee Time Warner Cable paid the town to 3 percent of gross revenues, and prohibited the cable company from billing subscribers any part of this cost. Other franchise agreements required Time Warner Cable to pay a 5 percent franchise fee and permitted it to pass-through two-fifths of this fee to subscribers.  The municipalities also had the option to voluntarily allocate two-fifths of the fee to a fund subsidizing the cost of expanding the cable network in their communities, in which case none of the fee was permitted to be passed-through to consumers. The Attorney General’s investigation found that Time Warner Cable violated both types of franchise fee restrictions.

As a result of the settlement, Time Warner customers will receive credits on their bill within 90 days, with the amount proportional to their monthly subscription charges. Individual overcharges vary by customer and town, but average $119 with accumulated interest. As part of the investigation, Time Warner Cable reviewed its records of all its New York franchise agreements purchased from Cablevision and identified no other towns where similar overcharges had taken place during the period from 2007 to 2013.

The case was handled by Assistant Attorney General Keith H. Gordon of the Bureau of Consumer Frauds and Protection, under the supervision of Bureau Chief Jane M. Azia and Executive Deputy Attorney General for Economic Justice Karla G. Sanchez.