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F.T.C. Sues DirecTV over Deceptive Advertising

Mar 13, 2015

The Federal Trade Commission (FTC) has filed a lawsuit alleging DirecTV deceptively advertised the cost of a two-year service promotion. Jessica L. Rich, director of the agency's bureau of consumer protection, says the FTC is looking to get millions of dollars in refunds. The New York Times reports that DirecTV is the nation's largest satellite provider with over 20 million subscribers. "A substantial portion" of these customers are affected by the issue at hand, an agency spokesman said, according to NYT.

Allegedly, DirecTV misled customers through deceptive advertising. The FTC says DirecTV marketed the two-year deal as a one year subscription with a starting rate of $19.99. In actuality, the plan required a two-year contract where the price would increase substantially the following year. There was also an expensive cancellation fee.

The suit, which was filed in the U.S. District Court for the North District of California, alleges that DirecTV has engaged in deceptive advertising since 2007. The FTC alleges that satellite provider also did not clearly inform customers that the price per month could jump up to $45 and that a $480 fee would be charged if customers wanted to cancel before the full two years expired. Additionally, the FTC accused DirecTV of advertising three free months of premium channels, such as HBO and Showtime, without indicating that they had to cancel in order to not get charged for the following months.

"DirecTV sought to lock customers into longer and more expensive contracts and premium packages that were not adequately disclosed," said FTC Chairwoman Edith Ramirez, in a statement. "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." DirecTV denies the allegations.

"The company tells consumers to ditch cable and switch to satellite TV to save money," said Ms. Rich, according to NYT. "DirecTV hid important terms in order to trick consumers into buying its satellite TV packages."

"You deserve to know exactly what you’re going to pay down the line before you get your first bill," said Delara Derakhshani, policy counsel for Consumers Union, a public policy and advocacy division of Consumer Reports, according to NYT. "Too often, consumers are told one price, only to find unexpected fees and rate hikes."

The FTC has taken legal action against DirecTV in the past. According to NYT, the company paid two settlements in 2005 and 2009, totaling $7.6 million for telemarketing violations.

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