By Shalini Ramachandran
The Federal Trade Commission filed a civil lawsuit against
DirecTV in California federal court Wednesday, alleging that the
satellite-TV giant engaged in deceptive advertising.
In its complaint, the FTC accused DirecTV of failing to
adequately disclose in advertisements and on its website that
consumers will be charged more after certain of its pay-TV offers
and promotions expire.
DirecTV, in response, defended its ads.
"The FTC's decision is flat-out wrong, and we will vigorously
defend ourselves, for as long as it takes," a DirecTV spokesman
said in an emailed 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."
In one offer, the FTC said DirecTV didn't clearly tell consumers
who sign on for a free, three-month promotion of premium channels
like HBO and Showtime that their credit or debit cards would be
automatically charged after the period is up. It "requires
consumers to proactively cancel" before the trial period ends, the
FTC said.
"DirecTV sought to lock customers into longer and more expensive
contracts and premium packages that were not adequately disclosed,"
FTC Chairwoman Edith Ramirez said 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 is the nation's second-largest pay-TV provider, with
more than 20 million subscribers. It is in the process of being
acquired by AT&T Inc. in a $49 billion deal being reviewed by
regulators.
The FTC is seeking a court order to permanently bar DirecTV from
continuing these practices, which it alleges violate the FTC's
Restore Online Shoppers' Confidence Act. It also is seeking
unspecified damages for consumers.
The FTC accused DirecTV of engaging in the alleged illegal
practices "in many instances" since 2007. As another example, the
agency said DirecTV has marketed a pay-TV subscription offer with a
discount "for 12 months, " without adequately disclosing that it
requires a two-year contract. In the second year of the deal, the
price jumps $25 to $45 a month, the FTC said, and there are steep
early cancellation fees.
Write to Shalini Ramachandran at
shalini.ramachandran@wsj.com
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