FTC to DirecTV: Ditch Deceptive Ads

WASHINGTON — The way the Federal Trade Commission sees it, “creepy” Rob Lowe is also crooked Rob Lowe.

Not the actor, of course, but the DirecTV ad campaign that paints cable as creepy, paranoid, socially awkward and eminently ditch-able. That ditch-and-switch campaign is instead a bait-and-switch campaign, the FTC suggested. DirecTV said the FTC is flat-out wrong.

The commission said the satellite operator is guilty of several counts of deceptively advertising the cost of its satellite-TV service and wants DirecTV to pay a potential settlement of many millions of dollars in refunds to consumers to settle a complaint filed last week in the U.S. District Court for the Northern District of California.

The FTC decision was bipartisan and unanimous — 5-0.

The FTC said DirecTV’s discounted price pitch failed to make it sufficiently clear that a two-year contract was required, that the price escalated significantly in the second year, or that consumers would have to opt out of the “free” premium channel offer and they would be automatically billed after the first three months.

DirecTV’s deceptive conduct and omission of facts in ads dates back to at least 2007, the regulator said. “DirecTV gave customers false and misleading information,” FTC Bureau of Consumer Protection director Jessica Rich told reporters. “The company tells consumers to ditch cable and switch to DirecTV to save money, and its advertisements claim consumers can receive TV packages for as low as $19.99 per month for 12 months.”

The complaint is not focused on what Direc-TV tells consumers, but rather what it doesn’t, said Rich, adding that the satellite-TV provider “hid” important terms in order to “trick” consumers into switching from cable, and that fine print disclosures don’t cut it.

There had been thousands of consumer complaints, Rich said.

She said the ballpark dollar figure the FTC was looking to get for consumer redress was in the “many millions of dollars,” given DirecTV’s 20 million subs at the end of 2013. She said many of those customers were affected in ways including paying an early termination fee of as much as $480, being charged higher price in the second year — as much as $45 per month more — and not knowing they had to cancel free HBO service after the first three months.

“The FTC’s decision is flat-out wrong and we will vigorously defend ourselves for as long as it takes,” DirecTV responded in a statement.

A DirecTV official speaking on background said the company has made some improvements to the ordering process, including getting rid of some potentially confusing rebate offers, and that it allows cancellation of the offer within 30 days without penalty. Most DirecTV customers place orders by phone, rather than online, and the details are communicated orally with customers asked to acknowledge they understand them, the spokesman said.

Title II, Take II

WASHINGTON — The Federal Communications Commission last week finally released the final language on its Feb. 26 vote to reclassify broadband ISPs as telecommunications services subject to common-carrier regulations.

As advertised by the Republicans, it included language that suggested the FCC could pivot toward more regulations in the future — the National Cable & Telecommunications Association was already branding it regulatory “regime change,” but “for now” was basically banning throttling, blocking and paid prioritization by both wired and mobile broadband services. It was clear from the language, as the FCC had telegraphed, that the ISPs were the snakes in the garden, in need of oversight so they did not bite the consumers or edge providers that rounded out the virtuous circle.

Also included were the general-conduct standard that could potentially capture various business models and the case-by-case review of interconnection issues as potential network-neutrality violations.

The final order now goes to the Federal Register, where after it is published, likely in two or three weeks, critics of the order (and there are many) will have 30 days to petition the FCC for reconsideration or 60 days to file suit in court.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.