The Federal Trade Commission is demanding in federal court that AT&T pay $3.95 billion to resolve the agency’s suit that DIRECTV engaged in deceptive advertising practices over an eight-year period, according to Law360.

The parties filed notice with the court last March that they had reached a settlement “in principle.” But the settlement collapsed and the trial began last week. Law360 reports that an FTC attorney said during the trial last week that AT&T ultimately rejected the penalty previously agreed to in the ‘settlement in principle.’

During last week’s trial proceedings, an AT&T attorney called the $3.95 billion demand “absurd.”

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The FTC suit, which was originally filed in federal court in March 2015, said DIRECTV’s discounted 12-month promotional plans failed to disclose they required a two-year contract. The agency added that the satcaster did not disclose that a customer might have to pay up to $45 a month more in the second year of the deal.

If the new DIRECTV subscriber tried to cancel before the two-year agreement had expired, he would have been required to pay up to $480 in early cancellation fees, the FTC noted.

The agency’s complaint targets the DIRECTV promotional plans from 2007 through 2015.

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DIRECTV, which is now owned by AT&T, has blasted the FTC’s complaint, saying in a statement that the agency is “flat-out wrong. 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.”

AT&T attorneys last week challenged the FTC’s contention that customers were deceived, saying they happily remained subscribers after the promotional period ended.

The FTC also said DIRECTV failed to disclose that its offer of three free months of a premium channel, such as HBO or Showtime, required consumers to proactively cancel the channel at the end of the promotional period or else they would be charged in future months.

— Phillip Swann



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