Last week, the FTC sued DirecTV for deceptive advertising practices for their digital satellite television services.
In particular, the FTC said that their advertising didn’t make clear a number of key facts:
1. That the low advertised rate, such as $19.99, only applied to the first year of service, and that rates in the second year were typically $25 to $45 higher per month.;
2. That the consumer had to agree to a two year contract, and if they cancelled, they would be charged a $20 cancellation fee for each month remaining on the contract;
3. That the consumer’s silence after three free months of premium TV channels such as HBO or Showtime would be construed as their acceptance of continuing to receive those channels at an average of $48 extra per month — in essence, a negative option plan.
Here is a sample ad from their website as of the day after the lawsuit was filed:
Even at full size, you might not be able to read the fine print.
Near the $19.99 price: with 24-mo agreement Select package plus add’l fees.
Under “view all packages”: All DirecTV offers require 24-month agreement. Requires enrollment in auto bill pay. Select package or above. Additional equipment required & advanced receiver fees apply. Minimum 2-room set up required for free Genie upgrade offer. Select through ultimate packages.
The offer details link discloses that up to a $480 early termination fee applies.
As we have explained many times, it is not enough for advertisers to disclose key facts somehow, somewhere. It has to be “clear and conspicuous” disclosure. In the words of the FTC complaint, the agency contends that “disclosures are inadequate in terms of their content, presentation, proximity, prominence or placement such that consumers are unlikely to see or understand such disclosures.”
The FTC’s lawsuit did not emphasize a key point that consumers complain about online — the total cost of the service. Even in the first year of the contract, it is nowhere near $19.99 a month because of a multitude of added required fees and charges not clearly specified in their ads.