DirecTV (DTV) is facing federal charges that accuse the satellite-TV provider of misleading consumers in its advertising about how much its service really costs, the Federal Trade Commission said on Wednesday. The FTC said in its lawsuit that DTV has omitted key details or obscured them since 2007.
For example, DirecTV's promotion of discounted 12-month programming packages didn't clearly disclose that those who signed up would be committed for two years, the FTC said, or that the cost would rise $45 a month in year two, with up to $480 in cancellation fees if service is dropped before two years had passed.
On top of that, DirecTV also failed to disclose that an offer of three free months of premium channels required the customer to cancel that upgrade or continue to get charged for it each month.
"DirecTV misled consumers about the cost of its satellite television services and cancellation fees," FTC Chairwoman Edith Ramirez said in a statement. "DirecTV sought to lock customers into longer and more expensive contracts and premium packages that were not adequately disclosed. 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."
The FTC is seeking a court order barring the advertising practices in its complaint as well as money to refund consumers.
According to the FTC's lawsuit, DirecTV committed numerous violations of the FTC Act, which is intended to protect consumers from being misled.
DirecTV does not see it the same way. "The FTC's decision is flat-out wrong and we will vigorously defend ourselves, for as long as it takes," it said in a statement emailed to CBS MoneyWatch. "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. For us to do anything less just doesn't make sense."