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Feds accuse DirecTV of deceptive ads, seek millions in refunds

The DirecTV headquarters building in El Segundo.
(REED SAXON)

Federal regulators on Wednesday accused satellite giant DirecTV of deceptive advertising for not clearly disclosing that a discounted 12-month package required a two-year contract that included a rate hike and large early cancellation fee.

The Federal Trade Commission said there were other misleading practices in DirecTV’s offers regarding free premium channels and is seeking “many millions of dollars” in refunds.

“DirecTV sought to lock customers into longer and more expensive contracts and premium packages that were not adequately disclosed,” said Edith Ramirez, the agency’s chairwoman.

“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,” she said.

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The government’s suit seeks a court order to stop the practices. A “large portion” of DirecTV’s 20 million subscribers would be entitled to refunds, said Jessica Rich, director of the agency’s Bureau of Consumer Protection.

“Thousands of consumers have complained about these practices,” she said.

DirecTV, of El Segundo, denied the 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,” DirecTV said.

But Rich said the company tried “to trick consumers” with its advertisements.

The suit alleges that the company violated federal law “in many instances since 2007" by “making deceptive claims or omissions of material facts in advertisements and on its website,” the agency alleged.

The company, which has about 20 million subscribers, failed to “clearly and prominently” disclose that a $25-a-month package for 12 months required a two-year contract in which the monthly price increased to $45 in the second year, the agency said.

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An offer on DirecTV’s website Wednesday advertised that service was “Now Only! 19.99" a month. In much smaller type next to the offer, the ad said “with 24-mo agreement” and “plus addt’l fees.”

Rich said that in many cases the details were in fine print or obscured by other text or pictures.

“Companies can’t hide important information from consumers to trick them into buying goods or services and that’s what we allege DirecTV did in deceptively advertising its satellite TV services,” she said.

The suit said customers who wanted out of the deal had to pay an early cancellation fee of $20 for each month remaining on their contract.

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Also, an offer for three free months of premium channels such as HBO and Showtime didn’t adequately disclose that customers would automatically be charged for them after the trial period unless they called to cancel, the agency said

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