DirecTV, the largest U.S. satellite-TV provider, was accused in a lawsuit by the Federal Trade Commission of misleading consumers about the costs of programming packages.
DirecTV tried to lock customers into longer and more expensive contracts and premium packages, the terms of which weren't adequately disclosed, the FTC said in a statement Wednesday about the lawsuit.
The case is the latest in a string of high-profile enforcement actions brought by the agency over consumer abuses ranging from misleading advertising to improper charges for unauthorized purchases made by children on their parents' mobile phones.
"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," FTC Chairwoman Edith Ramirez said of DirecTV.
DirecTV said it intends to fight the lawsuit.
"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," the El Segundo, California-based company said in a statement. "For us to do anything less doesn't make sense.'
Jessica Rich, head of the FTC's consumer protection office, said the lawsuit is separate from a review of DirecTV's acquisition by AT&T Inc. In October, the FTC sued AT&T over claims the company slowed data speeds for smartphone customers.
The company promoted its TV service for 12 months without clearly disclosing that consumers must sign a two-year contract with an early cancellation fee of up to $480 and that the cost of the packages then increases by as much as $45 a month in the second year, according to the FTC.
DirecTV also advertised premium channels that were free for three months without adequately explaining that consumers must contact the company to cancel to avoid charges, the agency said.
Thousands of consumers complained about DirecTV's practices, Rich said. The commission is seeking a court order to stop the alleged misconduct and a monetary award that could pay for refunds. Rich estimated consumers are entitled to ''many millions" of dollars.
~ Bloomberg News ~