DirecTv Inc. has settled a dispute with 31 state attorneys
general offices concerning allegations of consumer fraud involving its Total Choice
The inquiries stemmed from a decision to remove seven
Encore Media Group channels from its Total Choice lineup. The channels had been included
in a prepaid package that offered consumers $200 in cash back when signing up for a
year's worth of service.
However, the seven channels were later moved to a separate
tier that sold for another $4 per month, and they were replaced with QVC, Trinity
Broadcasting Network, Food Network, WGN, Animal Planet and Channel Earth.
Trouble surfaced when state law-enforcement officials in 20
states began receiving hundreds of complaints about the added cost for the Encore
The settlement resolved a situation that could have cost
the Digital Satellite System service millions of dollars if it had been found to have
violated state consumer-protection laws in all 31 states.
While admitting no wrongdoing, DirecTv will pay $812,000 to
cover the administrative costs incurred by 29 of the 31 states conducting the
investigations, or some $29,000 per state.
It also agreed not to implement future programming changes
involving prepaid programming without first offering a prorated refund to customers
wishing to drop the DSS service.
'Basically, we learned to communicate clearly,'
DirecTv spokesman Jeff Torkelson said. 'The idea is to make sure that subscribers
know that if any changes are made, they can get a refund.'
Torkelson said DirecTv will also offer all consumers that
were affected by the programming changes their Encore channels free-of-charge for the
period left on their contracts, at a cost to the company of $4 per month.
DirecTv continued to maintain that it was responding to
consumer demands for new programming when it made the changes, and that keeping the
high-priced Encore programming would have increased the $29.95 monthly fee for the Total
Torkelson disagreed with estimates that the settlement will
cost DirecTv $12 million, since many of the earliest consumer complaints resulted in
credits being issued immediately.