The largest satellite TV provider DirecTV has been charged by the Federal Trade Commission with deceptively advertising a one-year programming package that actually requires a two-year contract with a heftier price in its second year.
The pay-TV provider’s promotions pushing discounted 12-month programming packages are deceptive because they require a two-year contract, the FTC says.
DirecTV “does not clearly disclose that the cost of the package will increase by up to $45 more per month in the second year, and that early cancellation fees of up to $480 apply if consumers cancel the package before the end of the two-year period,” the agency said Wednesday.
The FTC also alleges that DirecTV fails to disclose that its offer of free premium channels for three months is, in fact, “a negative option continuity plan” that requires consumers to cancel to avoid automatic charges on their credit or debit cards.
“DirecTV misled consumers about the cost of its satellite television services and cancellation fees,” said FTC Chairwoman Edith Ramirez. “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.”
DirectTV is based in El Segundo, California. The company has more than 20 million subscribers across the United States.
According to the FTC’s complaint, has violated the FTC Act by making deceptive claims or omissions of material facts in advertisements and on its website for its satellite television subscription service.
Specifically, the FTC charges that DirecTV:
- Promotes its television service and programming package prices “for 12 months,” without clearly and prominently disclosing that these deals require consumers to sign a two-year contract (with a substantial early cancellation fee) and that the cost of the programming packages jumps $25 to $45 a month in the second year of the contract; and;
- Represents that consumers will receive premium channels, such as HBO and Showtime, “free for 3 months,” without adequately disclosing that:
1) consumers will be enrolled in a negative option continuity plan that charges for the premium channels after the trial period;
2) consumers must contact DIRECTV to cancel the plan before the trial period ends to avoid incurring the charges;
3) DIRECTV will use consumers’ credit or debit card information to charge them after the trial period ends; and
4) there are specific costs associated with the negative option continuity plan.