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DirecTV tricked customers into expensive packages, feds say

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(Read caption) A DirecTV satellite dish is attached to a roof at a home in Palo Alto, Calif. The government is taking the nation's biggest satellite TV provider to court, accusing DirecTV of misleading millions of consumers about the cost of its programming. The Federal Trade Commission said Wednesday that its complaint charges DirecTV Inc. with deceptively advertising a discounted 12-month programming package. Consumers weren't clearly told that the package requires a two-year contract, the commission said.

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Could its next commercial feature Charged-You-Hundreds-More-Dollars-Than-You-Expected Rob Lowe?

DirecTV has been tricking customers into buying satellite television packages that are more expensive than they appear, the Federal Trade Commission claims in a complaint filed against the company on Wednesday.

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Filed in federal court in California, the complaint says DirecTV, the nation’s largest satellite TV provider, deceptively advertised a 12-month package that, in fact, required a  two-year contract, with the second year coming with a considerably higher price tag.

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

DirecTV aggressively disputes the government’s claims.

“The FTC’s decision is flat-out wrong, and we will vigorously defend ourselves, for as long as it takes,” a spokesperson said in an email to NerdWallet. “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.”

According to the FTC, a 12-month discounted plan advertised by DirecTV actually requires a contract for twice that long. In the contract’s second year, its price increases by up to $45 per month, and there is a $480 early-cancellation fee if the customer tries to get out of the deal before the two years are up.

The commission says the company focuses on the first 12 months in its promotions without “clearly and prominently” disclosing the other aspects of the deal.

“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,” Ramirez said.

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The FTC also cited DirecTV for promotions that offer premium channels like HBO and Showtime “free for 3 months” without clearly disclosing that consumers will start being charged for those channels after the trial period is up if they don’t contact DirecTV and cancel them.

The commission is seeking a court order that bars DirecTV from continuing what it calls illegal conduct and a monetary judgement that could be used to pay back affected customers.

Based in El Segundo, California, DirecTV has more than 20 million subscribers nationwide.

Doug Gross is a staff writer covering personal finance for NerdWallet. Follow him on Twitter@doug_gross and on Google+.