In May 2012, Dish customers in Washington state began seeing an additional item on their bills — a mysterious “Washington Surcharge” of between $1.00 and $1.09 a month. The satellite provider stopped this surcharge later that year after the state’s attorney general’s office began investigating, and yesterday it agreed to issue a full refund to customers who’d been hit with the questionable fee.

Dish’s intent in adding this surcharge was to recoup money lost by a recent increase in the state’s business and occupation tax. Listing it as a surcharge allowed the satellite company to effectively raise rates without actually raising the advertised rates.

So a $59.99/month package would still be listed as such, even though no one in Washington would actually see that rate because of the surcharge.

This didn’t sit well with consumers or with the attorney general’s office, which believed that the surcharge was not only misleading but that it also gave Dish an unfair advantage over competitors that raised their rates in response to the tax increase.

Yesterday, AG Bob Ferguson and Dish announced that a deal had been reached. Dish will issue a full refund of $2 million to affected customers and pay an additional penalty of around $570,000 to the state.

Current Dish customers who were hit with the surcharge back in 2012 will see their refunds in the form of bill credits. Those who are no longer Dish customers will receive a check in the mail from the company.

There is an additional possible benefit for Washington residents who are still Dish subscribers. These consumers have the option of a $10 credit, two free pay-per-view movies, or two months of free access to the Epix movie channel.

To get the additional benefits, affected customers will need to go to a site, WaDishSettlement.com (it’s not active yet, but will be later this month) and file a claim.

As is to be expected in these sorts of settlements, Dish still maintains that it did nothing wrong and only settled to avoid a costly legal battle.

“When the state burdens businesses operating in Washington — and indirectly, Washington consumers — with a tax hike, we believe that the state should allow businesses to truthfully communicate with their customers about the burdens imposed by the state,” the company’s general counsel explains to the Seattle Times.

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