FTC Sues DirecTV for Deceptive Ads

SAN FRANCISCO (CN) - DirecTV has deceptively advertised its prices for 7 years, the Federal Trade Commission said Wednesday in a federal lawsuit.

"Tens of thousands" of customers have filed complaints about DirecTV, and attorneys general of all 50 states and the District of Columbia have taken action about it, the FTC says in the complaint.

It accuses DirecTV, which has more than 20 million subscribers, of failure to adequately disclose its prices, failure to disclose all material terms, failing to obtain consumers' express informed consent, and violating the 2012 Restore Online Shoppers' Confidence Act.

Among other things, the FTC says, DirecTV "typically" advertises reduced rates for programming packages in the first year of a two-year contract, then boosts rates by 50 to 70 percent in the second year. It also "typically impose(s)" a $3 to $5 per month increase in the cost of the programming services in the second year.

Also, DirecTV offers free subscriptions to premium channels such as HBO for a limited time, such as three months. If subscribers do not cancel, DirecTV charges about $48 more per month after the free period ends, "without obtaining express informed consent," according to the complaint.

The FTC says DirecTV has deceptively advertised since 2007, by claiming to offer subscription plans for as little as $19.99 a month, without adequate disclosures about the mandatory 24-month contract.

The FTC says ads and disclosures do not inform consumers that they will be enrolled in a "negative option continuity" contract that requires them to cancel additional services before the end of the free trial period to avoid increased charges, and without informing them of the amount of those charges.

The deceptive ads are published online, on TV, print and by mail, the FTC says.

When consumers call the phone number listed on DirecTV's website, telemarketers make the same inadequate marketing appeals that appear in its ads, the FTC says.

It seeks disgorgement, rescission of contracts, restitution, an injunction and costs.

DirecTV called the FTC lawsuit "flat-out wrong," a company spokesman told The New York Times. DirecTV paid the FTC a total of $7.6 million to settle previous telemarketing complaints, in 2005 and 2009, according to the Times.

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