The Federal Trade Commission is accusing DirecTV of deceptively advertising the discounted price of the first year of some of its programming packages without making clear that they required a two year contract, and that prices would jump $25 to $45 per month in the second year.
In a lawsuit filed against the company in federal court in San Francisco, the FTC accused DirecTV of misleading potential customers and sought to bar the company from making similar claims.
“DirecTV misled consumers about the cost of its satellite television services and cancellation fees,” FTC chairwoman Edith Ramirez said in a statement on Wednesday. “DirecTV sought to lock customers into longer and more expensive contracts and premium packages that were not adequately disclosed.”
“It’s a bedrock principle that the key terms of an offer to a consumer must be clear and conspicuous, not hidden in fine print,” Ramirez added.
The FTC also accused the company of misleadingly offering its subscribers three months of premium TV services, such as HBO and Showtime, without making clear that the customers would then be charged for the services unless they called in to cancel.
DirecTV said it would fight the FTC allegations.
“The FTC’s decision is flat out wrong and we will vigorously defend ourselves for as long as it takes,” the company said in a statement. “We go above and beyond to ensure that every new customer receives all the information they need, multiple times, to make informed and intelligent decisions. For us to do anything less just doesn’t make sense.”
At a FTC news conference on Wednesday, Jessica Rich, director of the commission’s bureau of consumer protection, said the case, which involves DirecTV advertising dating back to 2007, stemmed from numerous consumer complaints.
The FTC in its complaint cited one example of an October 2014 ad promoting an “All New. Limited Time Offer … Now for only $19.95 a month” in which disclosures about a two-year contract requirement and an increase in pricing in the second year were “inadequate.”
“Thousands of consumers have complained about these practices,” Rich said.
She said the FTC concluded that DirecTV’s advertising left consumers without enough information on fees “to make informed choices.
The company “hid important terms to trick consumers into buying satellite TV packages,” she said.
Rich declined to assign a total dollar figure to the relief sought, but she said that “many millions of dollars” were involved. She said some consumers confronted with unexpectedly high monthly subscriptions canceled — paying penalties as high as $540 — while other consumers reluctantly held on to subscriptions they didn’t want, meaning the amounts would have to be determined in court.
Rich rejected DirecTV’s argument that the FTC is “wrong.”
“We are very confident of our allegations. We are very confident that we are able to prove this case,” she said.