DirecTV Marketing Miscues Cost $10M


The cost of marketing went up significantly for DirecTV Inc. last week. The direct-broadcast satellite leader, facing alleged violations relating to its marketing practices, entered into two separate settlements, totaling just over $10 million.

In what the Federal Trade Commission called its largest civil penalty in a consumer-protection case, the satellite provider agreed to pay $5.4 million to settle charges relating to “Do Not Call” provisions in the agency’s Telemarketing Sales Rule. The FTC had alleged that telemarketers calling on behalf of DirecTV contacted consumers on the National Do Not Call Registry.

In the second settlement, DirecTV agreed to pay $5 million to 22 states to cover the cost of a task force they created to investigate alleged deceptive marketing practices by the satellite provider. That $5 million is not a fine, and DirecTV continues to deny the allegations regarding its advertising.

Relative to the do-not-call settlement, the FTC had charged that since October 2003, the DirecTV and the companies it retained to handle its telemarketing 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 a statement. “The Do Not Call Rule applies to all players in the telemarketing chain, including retailers and their telemarketers.”

In its statement, DirecTV said 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, cooperated with the FTC probe and 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 DirecTV’s advertised offers and terms of the contracts actually signed; problems consumers had with installations and reception; and the imposition of fees for delayed activations.

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 voluntary agreement with the states’ task force acknowledges that the company didn’t violate any federal or state law, according to a statement from DirecTV.