Consumer Complaints Against DIRECTV lead to $14 million Settlement

Mitch Lipka

Dec 14th 2010 at 10:36PM

Filed under: Consumer Ally, In the News

DIRECTV, one of the most complained-about companies in the country, has reached a settlement with all 50 states and the District of Columbia on a variety of consumer protection issues, including its notorious cancellation penalties.

The company has agreed to pay about $14 million and abide by a collection of rules of conduct for how it will treat its customers.

Curiously, the settlement comes almost exactly five years after a 22-state settlement was reached with DIRECTV over similar accusations. Complaints against the company have mounted in recent years, with more than 41,000 complaints processed just by the Better Business Bureau over the past three years.

The latest round of state actions started exactly one year ago when Washington's Attorney General sued DIRECTV. Washington Attorney General Rob McKenna's office said the 2,000 complaints against the company made it the single largest source of complaints.

Washington settled its case separate from the collective settlement with other states, but with largely the same terms and a $1 million payout to McKenna's office. DIRECTV, as is customary in settlements, admitted no wrongdoing.

"Under our settlement, DIRECTV agrees to disclosures that will help consumers know exactly what they're signing up for so that there are no painful surprises," McKenna said in a statement.

The company took an upbeat approach to reaching the settlements.

"DIRECTV has worked hand-in-hand with the Attorneys General to formalize many of the customer improvements we have made over the past few years and are pleased to have come to this agreement," Mike White, chairman, president and CEO of DIRECTV, said in a statement. "DIRECTV is committed to always operating with the highest standards of integrity and will move forward with continued dedication to providing the best video experience possible for our customers."

The settlements are supposed to end the long-vilified DIRECTV policy of imposing hundreds of dollars in cancellation penalties even if the reason for the customer canceling was due to the inability to receive a DIRECTV signal.

Refunds for certain complaints will handled by the states. Generally, they would be given to those who have lodged formal complaints with an attorney general's office. It may still be possible to file a complaint for a past issue you've had with DIRECTV.

According to Washington officials, here are some of the agreed-upon policies:

• Cancellation Fees: DIRECTV will not impose a cancellation fee on a consumer who ends service because of a recurring problem that can't be fixed.
• Advertising and Sales Disclosures: The company must clearly disclose the cost of the service, the contract length, additional charges for HD or DVR equipment, cancellation penalties, whether a promotional price is conditional on a rebate, whether an offer requires a particular payment, and other pertinent details. Extremely important disclosures, such as the requirement for a rebate, the required term of the consumer's commitment and the period the promotional price will be charged, must be disclosed in direct proximity to the price itself.
• Contract Changes: DIRECTV can't require consumers to enter into a new or extended contract when simply replacing or repairing defective equipment. If a service upgrade or other change by a consumer requires a new or additional term of commitment, DIRECTV must first obtain the consumer's consent to enter into a new or extended contract.
• Rebates and Promotional Offers: DIRECTV must disclose whether a rebate is required to obtain the promotional price. If the consumer's first bill does not reflect the price agreed to at the time of sale, DIRECTV must either provide that price or cancel the contract without penalty, if requested.

Kentucky consumers share $185,000 in DirectTv settlement

News from the office of Attorney General Jack Conway

Kentucky will share $185,000, of which $37,000 will go to investigative cost, when DirectTv, Inc. pays more than $13 million to settle allegations of deceptive and unfair sales practices. The settlement resolves claims made by General Conway and the attorneys general in 48 other states and the District of Columbia. DirectTv will also provide a claims process to offer restitution to eligible consumers. Attorney General Jack Conway announced Wednesday, December 15, 2010, in Frankfort.

Consumer refunds process

Unresolved complaints sent to DIRECTV or the Attorney General that involve conduct addressed in the settlement and occurring after January 1, 2007 are eligible for the restitution program. Consumers can file a complaint with DIRECTV or the Attorney General by June 9, 2011 to be considered for the restitution program as long as the complaint is about activity that occurred after January 1, 2007. Complaints may be made at DirectTv's website at www.directv.com/ag or by downloading and filing a complaint with the Office of the Attorney General. A general consumer complaint form may be obtained at http://ag.ky.gov/civil/consumerprotection/complaints/ or consumers can call 502-696-5389 and ask that a complaint form be mailed to them. Consumers who previously filed a complaint with the Attorney General do not need to re-file their complaint. The states alleged the satellite television provider and its third-party retailers engaged in deceptive and unfair sales practices by failing to clearly disclose pricing and term requirements and enrolling consumers in additional contracts without disclosing the terms.

In addition to the $13.25 million to be paid to the participating states and the separate claims process for consumer complaints, DirectTv entered into an agreement that limits how it can market services in the future. The agreement, known as a Consent Judgment and Permanent Injunction, has been tendered to the Franklin Circuit Court.

"I am pleased to announce the settlement today and to announce the possibility of consumer restitution for eligible consumers," General Conway said. "My office is committed to protecting Kentucky consumers from companies that engage in deceptive or misleading business practices."

This story was posted on 2010-12-16 09:49:20