FTC: DirecTV two-year contract adds up to false advertising

Mike Snider | USA TODAY

The Federal Trade Commission has charged satellite TV provider DirecTV with deceptive advertising.

The pay-TV firm's ads that promise a discounted 12-month programming package are deceptive because the deal requires a two-year contract, the agency says.

DirecTV does not clearly disclose that fact, the FTC charges, or that the programming cost will increase up to $45 more monthly in the second year. The company also fails to clearly inform consumers that they would be charged early cancellation fees of up to $480 should they cancel before the end of the two-year period.

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

DirecTV, which is the largest satellite TV provider in the U.S. with 20.35 million subscribers, called the FTC's charges "flat-out wrong," in a statement. "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."

The FTC voted 5-0 on the complaint, filed today in U.S. District Court for the Northern District of California. The agency is asking the court to bar DirecTV from continuing to engage in the alleged illegal conduct and to deliver a monetary judgment that would give refunds to affected consumers.

In its complaint, the FTC says that DirecTV has made deceptive claims or left out important facts in many of its ads and online since 2007. In addition to the two-year contract, the satellite provider told subscribers they would get premium channels such as HBO and Showtime free for three months but has not adequately disclosed that they must proactively cancel the channels after the trial period or they would have their credit card charged.

Follow Mike Snider on Twitter: @MikeSnider