DirecTV false advertising beef with FTC headed for trial in December

A San Francisco federal court has set a Dec. 5 trial date for a case in which the FTC accuses DirecTV (NASDAQ: DTV) of misleading customers.

AT&T (NYSE: T) finally closed its $49 billion purchase of the satellite TV company on Friday. It will now inherit the dispute with the Federal Trade Commission. In March, the agency filed suit against DirecTV, seeking "many millions of dollars" for those affected by the company's marketing practices.

The FTC has alleged that 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.

The agency also accuses the company of misleading customers about free three-month trials of premium channels such as HBO and Showtime. DirecTV, the agency says, isn't telling its customers that they'll be automatically charged subscription fees once that free trial period ends.

In its complaint, the FTC accuses DirecTV of making "deceptive claims or omissions of material facts in advertisements." It also says the satellite company has failed to "clearly and prominently" disclose critical contract terms.

Part of the FTC's beef lies in DirecTV's use of asterisks in ads. For example, one ad touts video package pricing as "Now only $19.99*/month" in a large font. However, the asterisk points to a disclosure that is in a much lighter print color and significantly smaller font size. Meanwhile, an additional assertion using a double asterisk directs the reader to another page altogether.

AT&T reps have yet to respond to FierceCable's inquiry for comment now that the case is headed to trial.

In March, DirecTV said, "The FTC's decision is flat-out wrong and we 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."

"DirecTV misled consumers about the cost of its satellite television services and cancellation fees [and] sought to lock customers into longer and more expensive contracts and premium packages that were not adequately disclosed," FTC Chairwoman Edith Ramirez said in March. "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."

For more:
- read this Palm Beach Post story
- read this Daily Business Review story

Related articles:
AT&T closes DirecTV purchase: Stankey in charge of new 'Home Solutions' operation, White retires
FCC poised to approve AT&T-DirecTV deal, create top pay-TV service in the U.S.
FTC accuses DirecTV of misleading customers about 12-month promo deals, free HBO

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