DirecTV Settles Do-Not-Call Case

For the second time this week, DirecTV Inc. has entered into a $5 million settlement regarding alleged violations relating to its marketing practices.

On Tuesday, in what the Federal Trade Commission called its largest civil penalty in a consumer-protection case, DirecTV agreed to pay $5.4 million to settle charges relating to do-not-call provisions in the FTC’s Telemarketing Sales Rule. The commission had alleged that telemarketers calling on behalf of DirecTV contracted consumers on the National Do Not Call Registry.

The day before, DirecTV entered into a $5 million settlement with 22 states to cover the cost of a task force they created to investigate alleged deceptive marketing practices by the direct-broadcast satellite service. That $5 million is not a fine, and DirecTV continues to deny the allegations regarding its advertising.

In terms of Tuesday’s settlement, the FTC had charged that since October 2003, the DBS provider and the companies it retained to telemarket its programming violated the do-not-call rules.

“This multimillion-dollar penalty drives home a simple point: Sellers are on the hook for calls placed on their behalf,” FTC chairman Deborah Platt Majoras said in prepared statement. “The Do Not Call Rule applies to all players in the telemarketing chain, including retailers and their telemarketers.”

DirecTV said it supports the national no-call list, and that most of the complaints that the FTC had received related to calls placed by a small number of independent retailers “who ignored DirecTV policies prohibiting unauthorized telemarketing.”

The DBS provider said it had terminated relationships with the offending retailers, that it had cooperated with the FTC probe and that it had agreed to closely monitor independent retailers.

The settlement with the 22 states related to DirecTV practices that included: the initial absence of local-channel access; differences between the DirecTV’s advertised offers and the terms of the contracts actually signed; problems consumers had with installations and reception; and the imposition of fees for delayed activations and terminations.

Under that settlement, DirecTV agreed to clearly inform consumers of their rights and obligations when accepting an advertised offer, as well as make restitution to consumers who have filed complaints regarding the issues that were involved in the settlement.

“The promised availability of local channels was an important factor for many who ordered DirecTV Inc.’s services, and their failure to provide that service was a primary concern to the states,” Nevada Attorney General George Chanos said in a prepared statement Monday.

DirecTV’s agreement with the states’ task force acknowledges that the DBS company didn’t violate any federal or state law, according to a statement from DirecTV. And the voluntary settlement of alleged deceptive marketing practices is a common business practice, the DirecTV said.

“DirecTV believes it is in the best interest of consumers and its business to amicably resolve such claims without costly litigation,” the satellite company said in its statement.

In addition to Nevada, the states involved in Monday’s settlement are Delaware, Florida, Georgia, Idaho, Illinois, Kansas, Maryland, Massachusetts, Montana, Nebraska, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Vermont and West Virginia.

At the FTC’s request regarding Tuesday’s settlement, the U.S. Department of Justice filed the complaint and stipulated settlements in Federal District Court in Los Angeles. Stipulated final judgments are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation, according to the FTC.

The settlements announced Tuesday, if adopted by the court, would settle the FTC’s complaint against DirecTV and four telemarketers. But litigation will continue against seven other defendants, telemarketers.