CenturyLink has agreed to pay a $6.1 million penalty after Washington state regulators found that the company failed to disclose fees that raised actual prices well above the advertised rates. CenturyLink must also stop charging a so-called "Internet Cost Recovery Fee" in the state, although customers may end up paying the fee until their contracts expire unless they take action to switch plans.

"CenturyLink deceived consumers by telling them they would pay one price and then charging them more," Washington Attorney General Bob Ferguson said in an announcement yesterday. "Companies must clearly disclose all added fees and charges to Washingtonians."

Ferguson encouraged Washington residents "who believe they have received bills that include undisclosed fees to file a complaint" with the state.

Ferguson's office said it began investigating CenturyLink in 2016 "after receiving complaints from consumers that their actual bills were more than the advertised price, or the price that they were promised by sales representatives."

Here's what Ferguson's office found:

There were three main fees CenturyLink did not disclose: a broadcast fee of $2.49 per month, a sports fee of $2.49 per month, and CenturyLink's "Internet Cost Recovery Fee," ranging from $0.99 to $1.99 per month. CenturyLink charged its Internet Cost Recovery Fee to 650,000 Washingtonians. Of those, another 60,000 were also charged the broadcast and sports fees. These fees alone added up to $7 per month to a television subscriber's bill—$84 per year. The investigation found that CenturyLink did not adequately disclose additional taxes and fees for its cable, Internet and telephone services.

CenturyLink admitted no wrongdoing but agreed to a financial settlement and changes in business practices as part of a consent decree filed in King County Superior Court on Monday. The attorney general's office detailed its allegations in a lawsuit filed the same day.

Internet Cost Recovery Fee

The attorney general's office said that "CenturyLink is required to... stop charging its Internet Cost Recovery Fee" in Washington state. CenturyLink says the fee "helps defray costs associated with building and maintaining CenturyLink's High-Speed Internet broadband network, as well as the costs of expanding network capacity to support the continued increase in customers' average broadband consumption." In other words, the fee covers the company's normal costs of doing business but is excluded from advertised rates in order to make CenturyLink's service sound cheaper than it really is. CenturyLink has been charging $1.99 for the Internet Cost Recovery Fee in Washington and continues to charge an Internet Cost Recovery Fee of $3.99 per Internet connection in other states.

There are circumstances in which CenturyLink can continue charging the fee in the Evergreen State until the end of customers' contracts, but the company must give everyone a chance to opt out of the fee. It would be easier for customers if CenturyLink simply had to eliminate the fee immediately for everyone, regardless of their contract status, but the settlement between Washington and CenturyLink isn't that simple.

"Within 90 days of the effective date of this consent decree, CenturyLink shall not charge any new Washington consumers for any Internet Cost Recovery Fee or Broadband Cost Recovery Fee," the consent decree said. Also within 90 days, CenturyLink must notify current Washington customers that they can cancel service without paying an early termination fee or switch to another plan that doesn't include the Internet Cost Recovery Fee.

If customers who are under contract do not cancel service or switch plans within 30 days of receiving that notice, "these consumers will continue to be charged the Internet or Broadband Cost Recovery Fee through the expiration of their Internet service plans," the consent decree said.

To settle the case, CenturyLink must also "disclose the actual price of its services, including charges and fees" in sales materials and advertising, provide order confirmations with complete bill summaries to customers "within three days after consumers order services from CenturyLink," and "honor any and all incentives and discounts promised to consumers." Like the promise to stop charging the Internet Cost Recovery Fee, these requirements only apply in Washington state.

To ensure that CenturyLink lives up to its commitment, the company must retain all sales call recordings and correspondence related to sales calls and submit compliance reports to the attorney general's office after one year and again after three years.