Feds accuse DirecTV of pricing scam

Feds accuse DirecTV of pricing scam
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Federal officials are charging DirecTV with bilking its subscribers by locking them into long-term contracts without clear details about future rates.

According to charges brought by the Federal Trade Commission (FTC) on Wednesday, the nation’s largest satellite TV provider violated the law by advertising a cheap 12-month programming package without prominently disclosing that it required a two-year contract at a much higher rate.

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“DirecTV misled consumers about the cost of its satellite television services and cancellation fees,” FTC Chairwoman Edith Ramirez said 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," she added.

After an introductory 12-month period, subscribers’ bills rose by as much as $45 per month, the FTC alleged. People who tried to cancel were stuck with an extra fee of up to $480.

The agency also accused DirecTV of failing to tell people that premium channels such as HBO and Showtime — which come for free during the first three months of their subscription — will automatically renew for about $48 per month, unless the subscriber actively orders them to be canceled.

DirecTV spokesman Darris Gringeri called the FTC’s decision “flat-out wrong” and said the company “will vigorously defend ourselves, for as long as it takes.”

“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,” he added in a statement to The Hill. “For us to do anything less just doesn’t make sense.”

The agency is seeking refunds for people affected by the practice and also wants a court to prohibit DirecTV from instituting similar practices in the future. 

All told, that could add up to “many millions of dollars,” according to Jessica Rich, the head of the FTC’s consumer protection division.

— This report was updated at 1:28 p.m.