The Federal Trade Commission is taking DirecTV to court over allegations that it's been deceptively advertising certain satellite TV deals for years. In its complaint, the FTC alleges that DirecTV failed to properly disclose important terms of its TV packages. The complaint says that DirecTV typically advertised 12-month deals without noting that they required a two-year contract, that prices were raised substantially during the second year, and that early cancellation fees may be imposed. The complaint also says that DirecTV failed to mention that offers of free premium channels, like HBO, would result in charges if those channels were not cancelled before the free period was up.
"DirecTV sought to lock customers into longer and more expensive contracts."
"DirecTV misled consumers about the cost of its satellite television services and cancellation fees," FTC chairwoman Edith Ramirez says in a statement. "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."
The commission has filed suit in a federal court, seeking to prohibit DirecTV from continuing these practices. It's also looking for a monetary judgement that will allow it to refund affected consumers. The FTC alleges that DirecTV violates the FTC Act by making deceptive claims and the Restore Online Shoppers’ Confidence Act by not clearly disclosing that premium channels would eventually result in charges.
DirecTV strongly disagrees with the the FTC's complaint. "The FTC’s decision is flat-out wrong and we will vigorously defend ourselves, for as long as it takes," a DirecTV spokesperson says in a statement provided to The Verge. "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."
The FTC says that it's seen many instances of this behavior since 2007. It says that DirecTV advertises programming packages as being "for 12 months" without clearly disclosing that a two-year contract is required. The complaint also says that DirecTV's pricing on these packages would jump from $25 to $45 during the second year of the contract and that it would charge up to $480 for early cancellation. While you'll find similar deal structures from other TV providers, you'll usually also find — placed in one corner or another of their website or literature — disclosures about rising prices and contracts. Apparently, the FTC believes that DirecTV's disclosures were too discreet, writing in its filing with the court that "to the extent" those disclosures were even present, they were too "inadequate" to properly inform consumers.