SAN FRANCISCO (KRON) — The Federal Trade Commission has filed a lawsuit in San Francisco’s federal court against DirectTV claiming the Southern California-based satellite service provider has been misleading customers into paying more money for service than they should.
According to the agency, DirectTV is using deceptive deals and marketing to lure customers. The FTC says customers think they are signing up for a one year contract but it turns out to be a 2 year contract. When the second year starts, the monthly rate increases up to $45 a month.
And for customers that ask to cancel their subscription to DirectTV before the 2 years is up, there is a sizable cancellation fee, up to $480.
“We require businesses to be truthful and to give consumers the information they need to make informed choices about goods and services,” said Jessica Rich, head of the agency’s consumer protection bureau. “Companies can’t hide important information from consumers to trick them into buying goods and services — and that’s what we allege DirecTV did.”
The FTC says DirectTV also tries to sign customers to premium channels like HBO and Showtime by offering 3 months free, but the FTC says the company is not being clear that customers will be charged for those channels after 3 months unless they call to cancel.
In a statement emailed to KRON, DirectTV said that customers sign a 24-month contract to get the very best deal for their first 12 months.
DirectTV is calling the FTC’s decision “flat-out wrong and we will vigorously defend themselves 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. For us to do anything less just doesn’t make sense,” the company said.
This isn’t the first suit the agency has filed against DirecTV. The company settled twice with the FTC — in 2005 and 2009 — and paid $7.6 million over telemarketing violations.