DENVER (CN) - Dish Network pulled a bait and switch scheme by raising rates on customers without notice, Colorado's attorney general claims in court.
Colorado sued Dish Network on Jan. 2 in Denver County Court, alleging deceptive trade, bait and switch advertising, and violation of the consumer law.
Attorney General John Suthers claims that Dish stopped telling potential customers that its price was subject to change at any time because it discovered that telling customers this discouraged them from buying the service.
"Dish sales representatives reported that consumers frequently questioned why Dish offered a programming package at a certain price, and required a 24-month commitment, while asserting a right to change its prices at any time," the complaint states. "The price change disclosure caused consumer 'pushback' and resulted in lost sales."
So, "In 2010, Dish removed the 'pre-sales disclosures' and all reference to its price being subject to change from its sales scripts," Suthers claims.
He says his office started receiving complaints about the price increases in February 2011, so his investigators made undercover phone calls to investigate.
In 24 out of 36 calls, Dish sales representatives made misleading statements which suggested that the consumer's second year price was not subject to change, the attorney general says.
The complaint cites the transcript of one call:
"Investigator: What about -and the prices during this time, they don't change - is there any change in the pricing during this time if I sign a two-year contract?
"Dish Sales Rep: No. Once your sign up for the contract, your first year will be 39 - $34.99 for that package.
"Investigator: No matter what?
"Dish Sales Rep: The second year will be $59.99. You're under a contract, it can't change.
"Investigator: So you can't change that price if I sign a contract for two years?
"Dish Sales Rep: Just like any other contract you sign.
"Dish Sales Rep: The price -if you have something in writing, we wouldn't do that to you. We're a Fortune 500 company, we're actually in the top 200.
"Dish Sales Rep: And we got there by having sound business ethics. And we have a great product and we have got the best pricing out there, probably the best services and best product.
"Dish Sales Rep: If you have something in writing from us and we changed it, we can't do that to you because you have it in writing. You have a contract."
The attorney general claims that the only time a Dish customer found out about the price disclosures was in a follow-up email describing the installation time and the amount they would initially pay for the service.
Suthers claims that Dish became aware of his investigation and revised its sales scripts in May 2013, to reinsert the 'price is subject to change' disclosures. Dish increased its rates again that year and made a healthy profit from it, the attorney general says.
"In 2013, Dish raised its monthly prices by $5.00 on most of its 14 million subscribers. Dish has calculated that the 2013 price increase increased DISH's annual revenue by $593 million dollars," the complaint states.
Suthers seeks restitution, civil penalties of $2,000 per violation, an injunction, and costs of suit.
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