An AT&T marketing executive testified that the company’s DirecTV unit didn’t test to see if disclosures were clear to consumers in a federal trial that could see the telecom pay as much as $4 billion to settle an FTC complaint of false advertising.
Last week, Federal Trade Commission attorneys showed an Oakland, California, federal court a videotaped deposition of Scott Hause, VP of consumer research and competitive intelligence at AT&T Entertainment. In the video, Hause reportedly conceded that DirecTV didn’t test the effectiveness of disclosures in its promotional ads. (Hause's video testimony was reported by subscription site Law360.)
The FTC wants AT&T to pay $3.95 billion to settle a false-advertising complaint filed against its DirecTV unit in March 2015, before AT&T closed on its $49 billion purchase of the satellite TV operator.
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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 two-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 three months.
On Friday, AT&T released a statement to FierceCable, noting, “We disagree with the FTC staff, and we are presenting our case to the judge. Our advertising and customer notifications were appropriate and clear. We reached an agreement on these issues years ago with all 50 state attorneys general, and none have ever told us we were not in full compliance. In fact, we’ve enhanced the disclosures.”
Meanwhile, AT&T spokesman Marty Richter took issue with an earlier FierceCable report, which noted that another AT&T marketing executive testified earlier last week that customers felt “misled” regarding DirecTV promotions.
“That was taken out of context from a small survey within 90 days of service activation,” Richter said. “Actual consumer data reflects our customers understand the terms of our offers. The survey was unrelated to the disclosures for promotional offers beyond the initial 90-day period that are at issue in this case. It reflected some customer concerns about delays in rebate credits appearing on first bills. It’s important to note that everyone ultimately got their discount, and that DirecTV subsequently addressed the issue by providing instant rebates and later introductory promotional pricing in replace of mail-in rebates.”