PREETBHARARA 

United States Attorney for the 

Southern District of New York 

By: ELLEN BLAIN 

Assistant United States Attorney 

86 Chambers Street, Third Floor 

New York, New York 10007 

Telephone: (212) 637-2743 

Facsimile: (212) 637-2730 

Email: ellen.blain@usdoj.gov 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

UNITED STATES OF AMERICA, 

Plaintiff, 

v. 

TIME WARNER CABLE, INC., 

Defendant. 

13 Civ. ------

COMPLAINT FOR CIVIL 

PENAL TIES, PERMANENT 

INJUNCTION, AND OTHER RELIEF 

ECFCASE 

Plaintiff, the United States of America, acting upon notification and authorization to the 

Attorney General by the Federal Trade Commission ("FTC" or the "Commission"), pursuant to 

Section 16(a)(l) ofthe Federal Trade Commission Act, 15 U.S.C. § 56(a)(l), for its Complaint, 

alleges: 

1. Plaintiffbrings this action under Sections 5(a), 5(m)(l)(A), 13(b), and 16(a) ofthe 

Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 45(a), 45(m)(l)(A), 53(b), and 56(a); 

and Section 621(a) of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681s(a), to obtain 

monetary civil penalties, a permanent injunction, and other equitable relief for Defendant's 

violations of Section 5 ofthe FTC Act; Section 615 ofthe FCRA, 15 U.S.C. § 1681m; and the 

rule regarding Duties of Users Regarding Risk-Based Pricing ("Risk-Based Pricing Rule"), 16 

C.P.R. § 640.1 et seq., issued pursuant to Section 615(h) of the FCRA, 15 U.S.C. § 1681m(h), 

and republished at 12 C.F.R. § 1022.70 et seq. 
JURISDICTION AND VENUE 

2. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 

1345, and 1355, and under 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b), 56(a), 1681s(a), and 

1692!. 

3. Venue is proper in this district under 28 U.S.C. §§ 1391(c)(2) and (d), and 

1395(a), and 15 U.S.C. § 53(b). 

DEFINITIONS 

4. This action is brought by the United States of America on behalf of the Federal 

Trade Commission. The Commission is an independent agency of the United States government 

given statutory authority and responsibility by the FTC Act, 15 U.S.C. §§ 41-58. The 

Commission is charged, inter alia, with enforcing Section 5(a) of the FTC Act, 15 U.S.C. § 

45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce, and the 

FCRA, 15 U.S.C. § 1681a et seq., which imposes duties upon consumer reporting agencies and 

those who furnish information to a consumer reporting agency or use information obtained from 

a consumer reporting agency. 

5. Defendant Time Warner Cable Inc. ("TWC"), is a Delaware corporation with its 

principal place of business at 60 Columbus Circle, New York, NY 10023. TWC transacts or has 

transacted business in this district and through the United States. At all times material to this 

Complaint, TWC has advertised, marketed, distributed, or sold video, high-speed data, digital 

telephone, and other services. 

COMMERCE 

6. At all times material to this Complaint, Defendant has maintained a substantial 

course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 

15 U.S.C. § 44. 

2 
THE FAIR CREDIT REPORTING ACT 

7. The FCRA was enacted in 1970, became effective on April25, 1971, and has 

been in force since that date. The Fair and Accurate Credit Transactions Act ("FACT Act") 

amended the FCRA in December 2003, Public Law No. 108-159, 117 Stat. 1952, and the DoddFrank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") amended the 

FCRA in July 2010, Pub. L. No. 111-203, 124 Stat. 1376. 

8. Section 621 ofthe FCRA, 15 U.S.C. § 1681s, authorizes the Commission to use 

all of its functions and powers under the FTC Act to enforce compliance with the FCRA by all 

persons subject thereto except to the extent that enforcement specifically is committed to some 

other governmental agency, irrespective of whether the person is engaged in commerce or meets 

any other jurisdictional tests set forth by the FTC Act. 

THE RISK-BASED PRICING RULE 

9. Section 311 ofthe FACT Act added Section 615(h), 15 U.S.C. 1681m(h), to the 

FCRA to direct the Commission and the Federal Reserve Board to prescribe a rule requiring 

companies to provide consumers with notice when they engage in the practice of risk-based 

pricing. Risk-based pricing occurs when companies provide consumers less favorable credit 

terms based on a review of their credit reports. The Commission's Risk-Based Pricing Rule, 16 

C.F.R. § 640.1 et seq., took effect on January 1, 2011; it was updated by a notice published in the 

Federal Register on July 15, 2011. The Dodd-Frank Act transferred rulemaking authority for 

most provisions of the FCRA to the Bureau of Consumer Financial Protection ("Bureau"); the 

FTC remains vested with enforcement authority. See Sections 1061 and 1088 ofthe Dodd-Frank 

Act. Pursuant to the Dodd-Frank Act and the FCRA, as amended, the Bureau republished the 

Risk-Based Pricing Rule as an interim final rule at 12 C.F.R. § 1022.70 et seq., effective 

December 30, 2011. The republished Risk-Based Pricing Rule contains technical and 

conforming changes to reflect the transfer of authority and certain other changes made by the 

Dodd-Frank Act, but does not alter the substantive obligations imposed on persons subject to the 

Risk-Based Pricing Rule. 

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10. The FCRA defines a "consumer report" as "any written, oral, or other 

communication of any information by a consumer reporting agency bearing on a consumer's 

credit worthiness, credit standing, credit capacity, character, general reputation, personal 

characteristics, or mode of living which is used or expected to be used or collected in whole or in 

part for the purpose of serving as a factor in establishing the consumer's eligibility for (A) credit 

or insurance to be used primarily for personal, family, or household purposes .... " 15 U.S.C. 

§ 1681a(d)(l). 

11. The Risk-Based Pricing Rule applies to any person who uses a consumer report in 

connection with an application for or grant of credit, and who grants to a consumer, based in 

whole or in part on the consumer report, credit on terms that are materially less favorable than 

those available to a substantial proportion of consumers. 16 C.F.R. § 640.3, republished at 12 

C.F.R. § 1022.72. 

12. The Risk-Based Pricing Rule, defines "material terms" to include: 

In the case of credit for which there is no annual percentage rate, the financial 

term that varies based on information in a consumer report that has the most 

significant financial impact on consumers, such as a deposit required in 

connection with credit extended by a telephone company or utility .... 

16 C.F.R. § 640.2, republished at 12 C.F.R. § 1022.71(n)(3). 

13. A person who is subject to the Risk-Based Pricing Rule must provide a risk-based 

pricing notice, containing the following specified information, to consumers receiving the 

materially less favorable terms: 

1. A statement that a consumer report includes information about the 

consumer's credit history and the type of information included in that 

history; 

2. A statement that the terms offered have been set based on information 

from a consumer report; 

3. A statement that the terms offered may be less favorable than the terms 

offered to consumers with better credit histories; 

4 
4. A statement that the consumer is encouraged to verify the accuracy of the 

information contained in the consumer report and has the right to dispute 

any inaccurate information in the report; 

5. The identity of each consumer reporting agency that furnished a consumer 

report used in the credit decision; 

6. A statement that Federal law gives the consumer the right to obtain a copy 

of a consumer report from the consumer reporting agency or agencies 

identified in the notice without charge for 60 days after receipt of the 

notice; 

7. A statement informing the consumer how to obtain a consumer report 

from the consumer reporting agency or agencies identified in the notice 

and providing contact information (including a toll-free telephone number, 

where applicable) specified by the consumer reporting agency or agencies; 

8. A statement directing consumers to the Web site of the Consumer 

Financial Protection Bureau to obtain more information about consumer 

reports; and 

9. If the creditor used a credit score, 

a) A statement that a credit score is a number that takes into account 

information in a consumer report, that the consumer's credit score was 

used to set the terms of credit offered, and that a credit score can change 

over time to reflect changes in the consumer's credit history; 

b) The credit score used in making its credit decision; 

c) The range of possible credit scores under the model used to 

generate the credit score; 

d) All of the key factors that adversely affected the credit score, 

limited to four key factors unless one of the key factors was the number of 

enquiries to the consumer's report and in such instance listing five key 

factors; 

5 
e) The date on which the credit score was created; and 

f) The name of the consumer reporting agency or other person that 

provided the credit score. 

See 16 C.P.R.§ 640.4, republished at 12 C.P.R.§ 1022.73. 

DEFENDANT'S BUSINESS PRACTICES 

14. TWC provides, among other things, cable television, high-speed internet, Voice 

Over IP telephone, and other services to consumers and businesses. In providing such services, 

TWC extends "credit" to consumers, as that term is defined under the PCRA. "Credit" is a 

"right granted by a creditor to an applicant to defer payment of a debt, incur debt and defer its 

payment, or purchase property or services and defer payment therefor," and a "creditor" is "a 

person who, in the ordinary course of business, regularly participates in a credit decision, 

including setting the terms ofthe credit." 12 C.P.R.§ 1002.2(j) and (l), incorporated by 

reference in 15 U.S.C. § 1681a(r)(5). TWC permits consumers to defer payment for some of its 

services. As a creditor that extends credit, ifTWC offers such credit to some consumers on 

materially less favorable terms than are available to a substantial proportion of its other 

customers based on a credit report, it must provide a risk-based pricing notice. 

15. In the course of reviewing a consumer's request for service, TWC retrieves the 

consumer's credit report. Based on the information included in the report, TWC requires some 

prospective customers to pay a deposit or to pay the first month's bill in advance in order to 

receive service. A substantial proportion ofTWC's prospective customers, those with more 

favorable credit histories, are not required to pay a deposit or the first month's bill. 

6 
16. Beginning January 1, 2011 through at least March 5, 2013, TWC failed to provide 

consumers who paid a deposit or other pre-payment with a notice, as set forth in the Risk-Based 

Pricing Rule, that the deposit requirement was imposed based on information contained in the 

consumer's credit report. 

Count I 

Violation of the Risk-Based Pricing Rule 

17. TWC has extended credit to consumers on material terms that are materially less 

favorable than the most favorable material terms available to a substantial proportion of its 

customers, based in whole or in part on its use of consumer reports. 

18. In numerous instances, TWC failed to provide notice to consumers that they were 

extended credit on material terms that are materially less favorable than the most favorable 

material terms available to a substantial proportion ofTWC's customers. Failure to provide such 

notice to a consumer constitutes a violation of the Risk-Based Pricing Rule. 

19. Pursuant to Section 621(a)(1) ofthe FCRA, 15 U.S.C. § 1681s(a)(l), TWC's 

violations of the Risk-Based Pricing Rule constitute unfair or deceptive acts or practices in 

violation of Section 5(a) ofthe FTC Act, 15 U.S.C. § 45(a). 

20. Section 621 ofthe FCRA, 15 U.S.C. § 1681s, authorizes the Commission to use 

all of its functions and powers under the FTC Act to enforce compliance with the requirements 

imposed by the FCRA on all persons subject thereto except to the extent that enforcement 

specifically is committed to some other governmental agency, irrespective of whether the person 

is engaged in commerce or meets any other jurisdictional tests set forth by the FTC Act. 

THIS COURT'S POWER TO GRANT RELIEF 

21. Section 13(b) ofthe FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant 

injunctive and such other relief as the Court may deem appropriate to halt and redress violations 

of any provision of law enforced by the FTC. 

7 
CIVIL PENALTIES FOR VIOLATIONS 

OF THE RISK-BASED PRICING RULE 

22. Section 621(a)(2)(A) ofthe FCRA, 15 U.S.C. § 168ls(a)(2)(A), as adjusted by 16 

C.F.R. § 1.98(m), authorizes the Court to award monetary civil penalties of not more than $3,500 

for each knowing violation of the FCRA that constitutes a pattern or practice of violations of the 

statute. 

23. Each instance in which TWC has failed to comply with Section 615(h)(l) ofthe 

FCRA, 15 U.S.C. § 1681m(h)(1), and the Risk-Based Pricing Rule, 16 C.F.R. § 640.1 et seq. and 

12 C.F .R. § 1 022.70 et seq., constitutes a separate violation of the FCRA for the purpose of 

assessing monetary civil penalties under Section 621(a)(2)(A) of the FCRA, 15 U.S.C. 

§ 1681 s( a)(2)(A). 

PRAYER FOR RELIEF 

WHEREFORE, Plaintiff, pursuant to 15 U.S.C. §§ 45(m)(l)(A), 53(b), 1692!, 1681s(a), 

and the Court's own equitable powers, respectfully requests that the Court: 

1. Enter judgment against TWC and in favor of Plaintiff for each violation alleged in 

this Complaint; 

2. Enter a permanent injunction to prevent future violations of the FCRA and the 

Risk-Based Pricing Rule by TWC; 

3. A ward such relief as the Court finds necessary to redress injury to consumers 

resulting from TWC's violations of the FCRA, including but not limited to, rescission or 

reformation of contracts, restitution, the refund of monies paid, and the disgorgement of illgotten gains; 

4. Award Plaintiff monetary civil penalties from TWC for each violation ofthe 

FCRA and the Risk-Based Pricing Rule alleged in this Complaint; and 

8 
5. A ward Plaintiff the costs of bringing this action, as well as such other and 

additional relief as the Court may determine to be just and proper. 

Dated: New York, New York 

December 19,2013 Respectfully submitted. 

FOR THE UNITED STATES OF AMERICA: 

PREET BHARARA 

United States Attorney for the 

Southern District of New York 

Attorney for the United States of America 

By: 

~NBLAIN 

?h~ · 

Assistant United States Attorney 

86 Chambers Street, Third Floor 

New York, New York 10007 

Telephone: (212) 637-2743 

Facsimile: (212) 637-2730 

Email: ellen.blain@usdoj .gov 

STUART F. DELERY 

Assistant Attorney General 

Civil Division 

United States Department of Justice 

MAAME EWUSI-MENSAH FRIMPONG 

Deputy Assistant Attorney General 

Civil Division 

MICHAELS. BLUME 

Director 

Consumer Protection Branch 

ANN 

cL~ ENTWISTLE 

Trial Attorney, Consumer Protection Branch 

U.S. Department of Justice 

P.O. Box 386 

Washington, D.C. 20044 

9 
OF COUNSEL: 

MANEESHA MITHAL 

Associate Director 

Division of Privacy and Identity Protection 

KATRINA A. BLODGETT 

Attorney 

Federal Trade Commission 

Division of Privacy and Identity Protection 

10