Business Blog
FTC says DIRECTV wasn’t so direct about fees and negative options
Have you seen the ads where a popular celebrity touts DIRECTV on his own behalf and as the Painfully Awkward, Overly Paranoid, or Crazy Hairy version of himself? Applying that to a lawsuit just filed by the FTC, there’s DIRECTV – and then there’s Deceptively Advertised DIRECTV.
DIRECTV is one of the biggest names in the business with more than 20 million customers. Through TV, print, direct mail, phone, and online promotions, the company advertises satellite TV packages for as low as $19.99 a month for 12 months. What’s more, DIRECTV said premium channels like HBO and Showtime are “free for 3 months.” But according to the FTC, DIRECTV failed to adequately disclose the true nature of the deal, meaning that consumers got stuck with higher prices and unauthorized charges.
The complaint offers a closer look at how the FTC says DIRECTV’s practices were misleading. For example, DIRECTV touted that eye-catching $19.99 monthly rate for 12 months of service without clearly explaining that: 1) Consumers couldn’t actually sign up for 12 months of service because DIRECTV required them to commit to 24 months; and 2) In the second year, DIRECTV typically hiked up the monthly fee by between 50-70%. Consumers who experienced bill shock at the start of that second year and wanted to cancel faced hefty termination fees.
The FTC also says DIRECTV’s “free for 3 months” premium channel offer was a deceptive negative option promotion. How did it work? DIRECTV typically enrolled consumers in the promotion automatically without clearly stating that unless consumers took the affirmative step of canceling before the end of the three-month period, DIRECTV would bill them extra for it every month. According to the complaint, after the “free” period ended, DIRECTV went ahead and used consumers' credit or debit card information without their consent to charge them for the service. And we’re not talking chump change here. The FTC says the monthly fee for those channels was around $48.
The lawsuit is pending in federal court in California. Meanwhile, here’s something for businesses to note in the pleadings. In addition to alleging that DIRECTV failed to disclose – or failed to adequately disclose – subscription prices and the nature of the premium channel offer, the FTC says the company's online practices violated the Restore Online Shoppers’ Confidence Act. Passed in 2010, ROSCA makes it illegal to charge consumers for goods and services sold through online negative options unless the seller:
- clearly and conspicuously discloses all material terms of the transaction before getting the consumer’s billing information;
- gets the consumer’s express informed consent before making the charge; and
- provides a simple way to stop recurring charges.
This is a case you’ll want to watch.
It is your choice whether to submit a comment. If you do, you must create a user name, or we will not post your comment. The Federal Trade Commission Act authorizes this information collection for purposes of managing online comments. Comments and user names are part of the Federal Trade Commission’s (FTC) public records system, and user names also are part of the FTC’s computer user records system. We may routinely use these records as described in the FTC’s Privacy Act system notices. For more information on how the FTC handles information that we collect, please read our privacy policy.
The purpose of this blog and its comments section is to inform readers about Federal Trade Commission activity, and share information to help them avoid, report, and recover from fraud, scams, and bad business practices. Your thoughts, ideas, and concerns are welcome, and we encourage comments. But keep in mind, this is a moderated blog. We review all comments before they are posted, and we won’t post comments that don’t comply with our commenting policy. We expect commenters to treat each other and the blog writers with respect.
We don't edit comments to remove objectionable content, so please ensure that your comment contains none of the above. The comments posted on this blog become part of the public domain. To protect your privacy and the privacy of other people, please do not include personal information. Opinions in comments that appear in this blog belong to the individuals who expressed them. They do not belong to or represent views of the Federal Trade Commission.
In reply to Att and DTV are the WORST!! by Krysk24
In reply to I certainly hope the FCC is by Peggy Jenkins
To report a problem to the FTC, go to www.FTC.gov/Complaint. The information you give will go into a secure database that the FTC and other law enforcement agencies use for investigations. The comments you put here on the blog don't go into the secure law enforcement database.
In reply to They charged us an extra 25 by Patti Kennedy
You can report that to the FTC at www.FTC.gov/Complaint and to your state Attorney General. The information you give the FTC goes into a secure database that the FTC and other law enforcement agencies use for investigations.
In reply to We have had a DirecTV account by JimmyZ
In reply to I am a victim of Direct tv by Guest
You can report that to the FTC at www.FTC.gov/Complaint. The information you give goes into a secure database that the FTC and other law enforcement agencies use for investigations.
The comments you put here on the blog don't go into the secure database.