Getty Images | Jeffrey Coolidge
Cable TV provider Cox is facing hundreds of arbitration demands alleging that it failed to adequately disclose its “Broadcast Surcharge” and “Regional Sports Surcharge” and that it used these fees to raise prices on customers who were promised fixed rates.
The Hattis & Lukacs law firm last night “filed 295 individual consumer arbitrations against Cox with the American Arbitration Association,” representing clients in 17 of the 19 states Cox operates in, attorney Daniel Hattis told Ars. Hattis said he aims to file thousands more arbitration cases against Cox, which has an estimated 3.4 million TV customers. The arbitration filings describe claimants as “victim[s] of Cox’s bait-and-switch scheme whereby the Company charges customers more for its Cable TV service plans than Cox advertised and promised.”
Cox’s customer service agreement has a mandatory arbitration clause, which customers can opt out of within 30 days of receiving service. “Cox is currently under the mistaken impression that the arbitration clause is a liability shield such that they’ll never have to face consequences for their past deception because class actions aren’t possible, and consumers won’t bother filing a bunch of individual arbitrations for $100 or so in damages,” Hattis told Ars in an email.
Seeking “refund of all payments”
Hattis is recruiting people for more arbitration filings through this webpage that says, “If you are a current or former Cox Cable TV customer, then you may have a claim for monthly overcharges.” The page says Cox’s broadcast and regional sports fees are $19 and $12.50 per month, respectively, and the site includes a form for potential claimants to fill out and submit.
Representative arbitration filings provided by Hattis say, “Cox advertised and quoted to Claimant that the broadcast channels and/or local sports channels would be included in the advertised Cable TV package price, when in fact Cox charged Claimant extra for those channels via disguised extra service charges on the bill which Cox calls the ‘Broadcast Surcharge’ and the ‘Regional Sports Surcharge.'” Cox never adequately disclosed these surcharges “or that the true monthly price of the Cox Cable TV service plan would be higher than what Cox advertised and quoted” and “never adequately disclosed that the purportedly ‘guaranteed’ service price would be covertly increased via increases to the so-called Surcharges in the middle of a promised promotional or contractual ‘guaranteed’ fixed-price period,” it says.
The individual arbitrations ask for refunds of all payments for the Broadcast Surcharge and Regional Sports Surcharges, for punitive damages and attorneys’ fees, and for injunctions that would force Cox to change how it advertises prices.
Arbitrations paired with lawsuit
Hattis last year filed a lawsuit against Cox with similar claims in San Diego County Superior Court; the plaintiff is a customer who opted out of Cox’s arbitration agreement. Hattis said that after the lawsuit was filed, reviews of Cox’s online ordering website suggested that “Cox has started including in the advertised price the amounts of the Broadcast Surcharge and Regional Sports Surcharge—and for new customers, those surcharges do not even seem to be listed as line items in the bill anymore at all. However, existing customers continued to see and pay these line-item surcharges on their bill, and for them, the surcharges are still increased in the middle of the supposedly ‘guaranteed’ price-locked contract term.”
The lawsuit moved forward, and in February, “we defeated Cox’s attempt to dismiss the case, and now discovery is underway,” Hattis told us. Judge Gregory Pollack’s ruling said, “Simply stated, Cox cannot market a guaranteed fixed price for full services and then increase the price by simply labeling the charge for some services as ‘fees’ or ‘surcharges.'” A jury trial was scheduled for December 2022.
The mass arbitrations are necessary, Hattis said, because the lawsuit had to be filed “as an individual public injunctive relief action—to get Cox to change its practices—due to the legal and enforceable arbitration clause in the Cox Residential Service Agreement.”
“Mass arbitration is the logical culmination of the legal positions that the corporate defense bar has taken for decades as its members obtained an ever-expanding interpretation of the Federal Arbitration Act, with the justification that large numbers of aggrieved consumers could always file large numbers of individual arbitration demands,” Hattis said.
A Cox spokesperson declined comment on the arbitration cases today, saying they have not seen the filings yet. We also asked Cox about whether it still charges the broadcast TV and regional sports fees to new customers and did not get an answer.
Fees make real price higher than advertised
Cox and other cable companies say their broadcast TV fees cover the amounts they pay for retransmission of broadcast signals and that regional sports fees cover the amounts they pay to regional sports networks that air the games of local sports teams in each market. Cox says the “Broadcast Surcharge reflects increasing costs associated with the delivery of broadcast TV stations to our customers” and that the “Regional Sports Surcharge reflects a portion of the costs associated with the delivery of regional sports networks to our customers and varies by market.”
But TV providers have to pay for all sorts of programming in order to provide the core service they advertise and sell to customers. Carving out two categories of programming and charging special fees for each is a strategy cable companies use to advertise a lower price than the one customers actually pay on their monthly bills.
