Look out, Rob Lowe. The FTC says that DirecTV — the company that the actor promotes in TV ads — has repeatedly misled consumers by making “deceptive claims or omissions of material facts” in commercials and its web site. Following a unanimous vote, the agency asked the U.S. District Court in San Francisco to bar the No. 1 satellite company from “further violations” and to pay an unspecified amount that would compensate consumers and disgorge “ill-gotten monies.”
DirecTV calls the decision “flat-out wrong” adding that it will “vigorously defend ourselves, for as long as it takes. 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.” The company is defending itself while the FCC and Justice Department weigh AT&T’s plan to buy the satellite company.
The dispute involves DirecTV’s pitches for its 12-month promotional discounts. The FTC says the company failed to mention that buyers had to sign a two-year contract, that the second year would cost an additional $45 per month, and that those who wanted to cancel before the end of the contract had to pay a penalty of $20 for each remaining month. DirecTV also offered three months of premium channels such as HBO and Showtime for free, but allegedly didn’t note that consumers would automatically be charged after that unless they took the initiative to opt out.
“DirecTV sought to lock customers into longer and more expensive contracts and premium packages that were not adequately disclosed,” FTC Chairwoman Edith Ramirez says. “It’s a bedrock principle that the key terms of an offer to a consumer must be clear and conspicuous, not hidden in the fine print.”
The feds say that since 2007 DirecTV has violated the FTC Act and the Restore Online Shoppers’ Confidence Act.
Consumers Union Policy Counsel Delara Derakhshani applauded the action, and seized the irresistible opportunity to make fun of DirecTV’s commercials. “You can just imagine the TV ad: ‘I’m Rob Lowe, and here’s the price you’ll pay for DirecTV. And I’m Hidden-in-the-Fine-Print Rob Lowe, and we’re actually going to jack up your bill.'”