Consumer group not happy with AGs in DirecTV case

Jessica M. Karmasek Dec. 16, 2010, 11:25am

California Attorney General Jerry Brown

SANTA MONICA, Calif. (Legal Newsline) - California-based Consumer Watchdog, in a statement Wednesday, contends a $13.25 million settlement reached between 50 states and the District of Columbia and the satellite television provider DirecTV doesn't go far enough.

The non-profit organization, according to its website, is dedicated to providing "an effective voice" for taxpayers and consumers.

The states alleged that the company engaged in "deceptive" and "unfair" sales practices.

In addition to the $13.25 million, DirecTV also agreed to pay restitution to consumers and to alter its business practices in the future.

"The lawsuit and settlement agreement announced today by the California Attorney General and DirecTV -- apparently one of a number of such agreements between other state attorneys general and DirecTV also announced today -- was negotiated in secret; neither Consumer Watchdog nor others who have sued DirecTV for numerous consumer abuses were aware of the investigation or the settlement negotiations," the organization said in a statement.

"Our initial review of the settlement suggests that it allows DirecTV to continue charging its illegal cancellation penalties and does not guarantee consumers any monetary remedy -- including refunds -- which are a crucial component of the class action lawsuit filed by Consumer Watchdog's lawyers on Sept. 18, 2008.

"The claims process proposed by the settlement is confusing and vague and gives DirecTV far too much control over how consumers' claims for refunds of illegal overcharges and other improper actions are resolved."

The organization's own lawsuit challenges DirecTV's practice of charging its customers an early cancellation penalty when the customers terminate service before the expiration of what the company calls the "term commitment" period, typically 18 to 24 months. The early cancellation penalty is charged regardless of the reason for the cancellation -- even if DirecTV could not provide service to the customer.

DirecTV, Consumer Watchdog alleges, in some cases withdrew the illegal fees from customers' bank accounts or credit cards without their knowledge or permission, causing consumers' accounts to be overdrawn, customers' checks to bounce, over-limit penalties to be assessed and their credit reports to be harmed as a result.

The multi-state investigation by the state attorneys general also was prompted by "countless" consumer complaints. Among them, DirecTV:

- Did not clearly disclose to consumers the price that the consumer would be charged and the commitment term that the consumer would be required to keep DIRECTV services;

- Did not clearly disclose to consumers limitations on getting a certain price for DIRECTV;

- Enrolled consumers in additional contracts or contract terms without clearly disclosing the terms to the consumer;

- Enrolled consumers in additional contracts when replacing defective equipment;

- Did not clearly disclose to consumers that they would automatically renew a seasonal sports package; and

- Promised refunds to consumers when the consumers would actually only receive a credit on their bills.

The multi-state settlement, announced Wednesday, requires DirecTV to:

- Clearly disclose all material terms to consumers;

- Replace leased equipment that is defective at no cost to the consumer except shipping costs;

- Not require the consumer to enter into a supplemental contract when replacing defective equipment;

- Clearly disclose when a consumer is entering into a contract;

- Clearly notify consumers before a consumer is obligated to pay for a seasonal sports package;

- Clearly disclose all limitations on the availability of local channels;

- Not misrepresent the availability of sports programming;

- Not represent that a consumer would receive a refund if the consumer would actually get a bill credit; and

- Clearly notify consumers at least 10 days before charging the amount of any cancellation or equipment fee.

Consumer Watchdog said it plans to proceed with its class action lawsuit against the satellite company, taking "all actions necessary to protect the consumers whose interests are at stake."

According to the state attorneys general, all unresolved complaints that have been sent to DirecTV that involve conduct addressed in the settlement and that occurred after Jan. 1, 2007 are eligible for the restitution program.

Additionally, consumers can file a complaint with DirecTV by June 9, 2011 as long as the complaint is about activity that occurred after Jan. 1, 2007.

Initially, DirecTV will attempt to resolve the complaints with consumers. If the complaint cannot be resolved, the company shall refer the complaint to a claims administrator. The administrator will then resolve the dispute between the consumer and DirecTV.

From Legal Newsline: Reach Jessica Karmasek by e-mail at

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