The Federal Trade Commission wants AT&T to pay $3.95 billion to settle a false-advertising complaint filed against its DirecTV unit in March 2015.
The agency is claiming that from 2007 to 2015, as 33 million customers signed up for satellite service, DirecTV didn't adequately disclose that a discounted 12-month video package requires a 2-year contract, and the monthly bill increases by as much as $45 in the second year of the agreement. DirecTV is also accused of not informing customers that they’d be subject to a $480 fine if they broke their contract, or that charges for premium channels would kick in after 3 months.
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The FTC estimates that DirecTV profited by $3.95 billion based on this alleged false advertising.
The agency’s demand was voiced Monday, as a trial over the matter got underway in an Oakland, California, federal court.
"That's a lot of money, but it is because DirecTV's conduct affected a lot of people,” said FTC attorney Jacob Snow, according to Law360.
Snow also told the court that AT&T attempted to settle the dispute in April, but didn’t offer up enough money to do so.
In response, AT&T attorney Jeff Tillotson noted that the FTC’s damages assessment was “absurd,” noting that customers stay with the service for an average of 5.5 years.
“How can a customer who’s coming back be deceived?” Tillotson asked.
However, on Tuesday, Brad Bentley, senior VP of DirecTV and chief marketing officer at AT&T, conceded that among customers polled 90 days after subscribing to DirecTV, 33% felt misled during the sign-up process.
AT&T reps didn't immediately respond to FierceCable's inquiry for comment.