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DIRECTV Pays $13M to Stop Consumer Fraud Suit
By Swanni

Washington, D.C. (December 14, 2010) -- DIRECTV has agreed to pay $13.25 million to settle a 48-state lawsuit charging that it misled consumers about pricing and contracts.

That's according to a report from the Cleveland Plain Dealer.

The newspaper writes today that the settlement must still be approved by the court. But the satcaster has reached an agreement with the 48 state governments that filed suit. Once the agreement is approved by the court, eligible consumers can seek restitution; details of the restitution process were not immediately available. (Note: Multichannel News reports that DIRECTV says the settlement, including court costs, comes to $14.2 million.)

The lawsuit centered largely on DIRECTV's practice of requiring consumers to enter into two-year contracts for a variety of services from the initial subscription to replacing the satcaster's equipment, even if it was defective.

But the Plain Dealer reports that the complaint also charged that DIRECTV:

* Failed to clearly disclose the price that a consumer had to pay for programming and other services and the requirement of a commitment term (the 2 year contract.)

* Failed to clearly disclose time restrictions and other limitations on advertised prices.

* Required consumers to extend their two-year contracts without clearly disclosing the terms.

* Required consumers to extend their two-year contracts when they asked DIRECTV to replace defective equipment, such as the set-top.

* Failed to tell consumers that seasonal sports packages, such as the NFL Sunday Ticket, would automatically renew; to cancel the package, the  subscriber had to call DIRECTV.

The Plain Dealer reports that DIRECTV has now agreed to fully disclose prices and contract terms, tell consumers if they are required to pay for sports packages after the first year of subscribing to it, and when the consumer is entering into a binding contract.

DIRECTV also agreed not to require consumers to extend their contracts when they got a replacement for defective equipment.
 
The states that participated in the settlement are: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oklahoma, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming and the District of Columbia.

Update: DIRECTV issued a statement this afternoon saying that it has reached agreements with all 50 states (although only 48 filed suit). The satcaster added that it had already implemented many of the changes required in the settlement.

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Phillip Swann is president and publisher of TVPredictions.com. He has been quoted in dozens of publications and broadcast outlets, including CNN, Fox News, Inside Edition, The New York Times, The Washington Post, The Chicago Tribune, The Financial Times, The Associated Press and The Hollywood Reporter. He can be reached at swann@tvpredictions.com or at 703-505-3064.

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