For years, everyone involved in the TV or phone business has boosted their profits using increasingly dishonest tactics, all made legitimate by a few paragraphs of fine print on ever advertisement. For example, the advertised rate doesn’t actually include all of the costs necessary to use the package you are buying. There are plenty of add-on fees, plus modem rental, DVR rental, and so on, which I noticed not long ago when comparing Comcast to CenturyLink here in Denver, one of many articles about cable bill scams I’ve written over the years.
And, then of course, there is the gold standard of trickery, the limited-time offer, where your cable or satellite provider starts by offering you a reasonable competitive rate for a limited time. Then, your rate goes up, automatically, and all those great offers are for “new customers only.”
FTC Claims DirecTV False Advertising
Since all the TV and phone companies use this low-priced trial offer, it was somewhat surprising today to see that the FTC is charging DirectTV with false advertising regarding it’s introductory trial offer of service. Or, as the FTC blog says, “there’s DIRECTV — and then there’s Deceptively Advertised DIRECTV.” – Ouch.
The key to this particular allegation seems to be that the FTC doesn’t believe that DirecTV made it clear enough that even though the trial offer was for one year, that the contract was for TWO YEARS. In other words, you were signing a contract to pay the low price for one year, and the high price for the second year. Cancellation fees were over $400 according to the FTC complaint. Contrast this to Comcast which offers a low one-year rate and a matching one-year contract.
The interesting part here, is that in my experience this IS disclosed somewhere. In fact, when we finally cut the cord from cable earlier this year, one of the issues was the option to bundle DirecTV (or get Dish Network separately) with our CenturyLink internet. I refused to get DirecTV because I saw that I would have to sign a two-year contract and that my rates would be ridiculous during that second year.
In fact, the even more deceptive practice is that CenturyLink’s website explicitly states that you are signing up for a one-year contract. What is not made clear is that this contract duration is only for the CenturyLink part. If you bundle DirecTV, then that part has a two-year contract, even though you are only signing up for one-year with CenturyLink. The only reason I caught that was that I had already investigated DirecTV and wanted to make 100% sure I wasn’t accidentally signing up for a two-year deal with them. Click enough of those little informational buttons, and you eventually get the actual terms of service, and sure enough, there in the contract language it says that you are indeed signing up for two years.
Curiously, I think this is the same practice at Dish Network, the question is, will the FTC be suing Dish Network (a.k.a. Echostar) next, or is there something about the way that Dish displays its fine print that makes it acceptable in the eyes of the FTC? This screenshot is from the Dish website today (3/12/15) and has the same bold print for 12 mo. with the same tiny but you are signing up for 24-months below.
DirecTV’s argument will be, as always in these kinds of cases, that it did disclose (and had the customers sign that they got said disclosure) the necessary information and that customers were required to find it, understand it, and live by it, no matter how many didn’t realize they what they were getting into. To win its case, the FTC will have to prove that whatever disclosures the company made were not sufficient.
Of course, none of that will happen. Instead, the company and the FTC will pick an amount of money that is insignificant to the company (other than as a write off on its financial statements) but that sounds impressive to the public to be the fine without the company admitting any wrongdoing. Then, here comes the irony, the company will agree to disclose information better. Exactly, what kind of fine print and buried contract language will be used for that will be up to the company.