State Attorneys General Accept $13 Million DIRECTV Settlement

State Attorneys General Accept $13 Million DIRECTV Settlement

Bruce Edward Walker

Bruce Edward Walker was managing editor of InfoTech & Telecom News from 2010 to 2012.... (read full bio)

An agreement between 50 State Attorneys General and the District of Columbia with DIRECTV requires the satellite TV provider alter its business practices, offer restitution to eligible consumers, and remit $13.25 million to the states and DC.

Announced December 15, the settlement addresses allegations DIRECTV locked customers into long-term contracts through misleading advertising promotions and without clearly disclosing material contract provisions, including the fact and consequences of the lengthy commitment term.

Darris A. Gringeri, vice president, DIRECTV Public Relations, said the company committed no wrongdoing. “It’s important to know that there has been no finding of a violation of the law,” he said. “These are all settlements just like a settlement of any civil case. Multistate investigations are very common, and as a national company, we welcomed full participation to ensure equal treatment of all our customers.” 

Terms of Agreement
As part of the settlement, DIRECTV agreed to provide consumers a complete set of documents forming the contract at or before installation; replace defective equipment without requiring consumers enter an additional contract; disclose all limitations on the availability of local channels and sports programming; allow a grace period for consumers to dispute charges different from the initial purchase price after receiving their first bill; replace defective leased equipment without charge except shipping costs; and clearly notify consumers at least 10 days before charging a cancellation or equipment fee.

Additionally, DIRECTV will offer restitution to eligible consumers who file complaints regarding conduct addressed in the settlement occurring after January 1, 2007 with either their state’s respective Attorney General or DIRECTV prior to June 9, 2011. Consumers unhappy with the company’s offer of restitution may choose to have the complaint decided by a third-party claims administrator.

“DIRECTV had amassed a terrible record of failing to disclose information to consumers about contractual terms, fees, and even things as straightforward as available channels,” said Joy Yearout, spokeswoman for Michigan Attorney General Mike Cox.

‘Focus on the Customer’

Of the settlement funds to be paid to the states, preliminary estimates suggest Michigan’s share of the settlement to be approximately $185,000, which will go toward the state’s General Fund.

“This settlement ensures consumers will have access to accurate information, and offers the opportunity for previous customers to seek redress for problems with DIRECTV,” said Yearout.

Gringeri commented that some Attorneys General were sensationalizing the announcement “to take advantage of the current news cycle. The fact is, we were implementing the majority of these improvements long before the AGs even brought this to our attention.  When our customers let us know there are issues, we decide on our own to fix them, we don’t wait for the AGs to come to us.  So while some AGs are grandstanding, we’d rather focus on the customer and move forward with giving them the best service possible,” he said.

‘Clear and Conspicuous Disclosure’
Despite the agreement reached with all 50 states and the District of Columbia, Consumer Watchdog announced its intention to proceed with a class action lawsuit against DIRECTV.
In a press statement, the group remarked: “Our initial review of the settlement suggests that it allows DIRECTV to continue charging its illegal cancellation penalties and does not guarantee consumers any monetary remedy – including refunds – which are a crucial component of the class action lawsuit filed by Consumer Watchdog’s lawyers on September 18, 2008. The claims process proposed by the settlement is confusing and vague and gives DIRECTV far too much control over how consumers’ claims for refunds of illegal overcharges and other improper actions are resolved.”

Gringeri said DIRECTV had made changes prior to the agreements made with Attorneys General. “For instance we’ve already made a number of changes a while back to make our confirmation letters, e-mails and lease agreements even clearer when a customer signs on.  We also continue to obtain a customer’s express assent to the 24-month programming agreement associated with new or upgraded equipment.”

He continued: “We will continue to clearly and conspicuously disclose other material terms of the offer, such as when an offer is limited to new customers, that blackouts may apply when sports are featured, that offer is contingent on credit and/or specific form of payment, applicable ECF [Early Cancellation Fees] and that NRFs [Non-Return Fees] may apply and the conditions for claiming rebates. We were already doing those things, but this agreement just formalizes those practices.”

Bruce Edward Walker (bwalker@heartland.org) is managing editor of Infotech & Telecom News.

Bruce Edward Walker

Bruce Edward Walker was managing editor of InfoTech & Telecom News from 2010 to 2012.... (read full bio)