EchoStar Will Pay $5 Million to Settle Complaints

EchoStar Communications Corp. has agreed to pay $5 million to settle customer complaints about its satellite TV service in 13 states, including California, the attorney general of Colorado said Thursday.

Prosecutors in those states had been investigating EchoStar for allegedly violating consumer protection laws with misleading advertisements, but no lawsuits have been filed.

EchoStar executives said the company had not broken any laws but agreed to the settlement to avoid potentially long and costly litigation. The Littleton, Colo.-based company agreed to change advertisements and other sales literature for its Dish Network and to improve procedures for customers to cancel service and resolve complaints quickly.

“Customer satisfaction has always been a top priority for our company,” Chairman and Chief Executive Charles Ergen said.

The settlement involves about 1,800 complaints from consumers who believed that Dish Network misled them about pricing and contract issues, and charged their bank accounts or credit cards without consent, Colorado Atty. Gen. Ken Salazar said.

Customers had complained that the ads failed to disclose a $240 early-termination fee and extra charges for local programming, Salazar said.

About $3 million of the settlement will be used to compensate consumers, and the rest will be used to cover the cost of the states’ 18-month investigation.

The settlement will take effect in September. Consumers who have filed complaints will be compensated at an amount to be determined by the attorney general in each state.

“I think the message to all those businesses in this state and in this country is first and foremost be upfront with your customers,” Salazar said. “If you don’t, you may end up in an investigation like EchoStar was in.”

The states involved besides California and Colorado are Connecticut, Florida, Georgia, Illinois, Louisiana, Minnesota, New Jersey, New York, Ohio, Oregon and Wisconsin.

EchoStar is the nation’s second-largest satellite TV provider, with 8.5 million subscribers at the end of March, second to DirecTV’s 11.4 million. The company reported a $58-million profit in the first quarter.

EchoStar shares Thursday rose $1.14, or 3.7%, to $32.24 on Nasdaq.