Thursday, December 16, 2010
SAN DIEGO The California attorney general's office announced Thursday a $13 million settlement with DirecTV, plus restitution for customers who were subjected to misleading sales and marketing practices on the part of the satellite television company.
As part of the agreement, filed in San Diego Superior Court by Attorney General Jerry Brown and 48 other state attorneys general, DirecTV agreed to clearly state all costs, services offered, length of contracts and terms of cancellations and refunds.
"DirecTV won customers by offering special deals with hidden costs, and also extended customers' contracts without telling them," Brown said. "With this settlement, DirecTV will reimburse customers and change its sales and advertising practices to comply with the law."
The resolution requires DirecTV to make full restitution to all customers affected by the misleading practices. In addition, the company is required to pay $13.25 million in civil penalties and costs to the 49 states and District of Columbia.
The multi-state investigation found that the El Segundo-based company, which has more than 18 million subscribers nationwide and more than 1 million in California, engaged in practices that misled customers about how much they would be required to pay and what kind of programming they could expect.
In particular, the probe established that DirecTV:
- extended contracts without customers' knowledge. When the company serviced faulty DirecTV equipment, its representative asked customers to sign what appeared to be service documents. Customers later learned that their signatures had extended their contacts for another two years.
- failed to deliver promised channels. In its promotions, the company promised potential subscribers access to sports channels and local stations, but subscribers discovered that some of the promised programming was not available.
- changed the terms of promotions. The company offered cash-back deals and free trials, but did not disclose key details, and some customers ended up paying more than expected. For example, DirecTV offered a two-year deal at $29.99 a month -- compared to a typical charge of $53.99 or $63.99 -- but did not disclose that the second year was at the regular price.
- The California AG's office is reviewing the 1,136 complaints it has received about DirecTV to determine which customers are entitled to restitution. Complaints about conduct that occurred after Jan. 1, 2007, are eligible for restitution.
- Californians who believe they were misled by DirecTV have until June 9 to file a complaint with the Attorney General's Office at http://ag.ca.gov/consumers/general.php.