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DirecTV

DIRECTV in Hot Water for Rob Lowe Advertising Campaign

by David Klein

April 10, 2015

advertisingThe National Advertising Division (“NAD”) of the Better Business Bureau, acting on a complaint from Comcast, has recommended that DIRECTV modify some of the claims made in its popular Rob Lowe commercials, or otherwise cease airing them altogether. DIRECTV has indicated that they intend to appeal the decision, which although non-binding, could lead to a referral to a governmental agency if ignored. This news is in addition to a recent suit filed by the Federal Trade Commission against DIRECTV for unrelated claims of deceptive advertising practices.

What about these commercials drew the ire of Comcast and the Better Business Bureau?

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FTC Lawsuit Accuses DIRECTV of Deceptive Advertising, ROSCA Violations

by David Klein

March 13, 2015

roscaThis Wednesday, the Federal Trade Commission (the “FTC or Commission”) sued satellite television service provider DirecTV, Inc. and its subsidiary (“DIRECTV”) in federal court in San Francisco.  The Commission has accused DIRECTV of violating the FTC Act and the Restore Online Shoppers’ Confidence Act (“ROSCA”) with purportedly deceptive advertising and sales practices.

Why is DIRECTV’s television advertising getting such bad reception from the FTC?

DIRECTV’s Satellite Package Advertising

DIRECTV provides direct-to-home digital television service to 20.3 million subscribers in the United States.  Its various programming packages, which are advertised through a variety of media, including television, print, mail and the Internet, are typically offered with a mandatory two-year term.  Normally, customers who cancel their subscriptions early are required to pay a cancellation fee of $20 for each month remaining on their contracts.

DIRECTV’s subscription packages allegedly charged a lower monthly rate during the first year and a much higher rate (that increased by as much as 70%) during year two.  According to the FTC, DIRECTV also advertised that subscribers would receive additional premium channels, such as HBO, Cinemax and Showtime, free of charge for a limited period of time.  Afterward, consumers were purportedly required to affirmatively cancel these premium channels before the end of the initial period to avoid monthly charges.  According to the FTC’s complaint, those who took no action or otherwise remained silent were charged additional fees of around $48 per month.

FTC Deceptive Advertising and ROSCA Lawsuit

In Wednesday’s complaint, the FTC alleged that DIRECTV’s marketing and sales strategies were unfair or deceptive.  The Commission has traditionally considered deceptive practices to include misrepresentations or deceptive omissions of material fact.

According to the FTC, DIRECTV’s twelve-month programming package failed to adequately disclose the mandatory two-year agreement period and cancellation fee, as well as its fee hike during year two of service.  Further, the Commission contends that DIRECTV violated the FTC Act by offering free premium channels for approximately three months, without giving consumers sufficient notice that they would be automatically enrolled in a premium service plan after the trial period ended.

The FTC has also alleged that DIRECTV violated ROSCA, a relatively new federal regulation first enforced by the Commission last October.  ROSCA generally prohibits a marketer from selling goods or services online through a “negative option feature” – a deal that considers silence as consumers’ acceptance of the offer.  Negative option features are permissible only if the seller: (1) clearly and conspicuously discloses all material terms associated with the transaction; (2) obtains consumer express informed consent; and (3) provides a simple mechanism to stop recurring charges.  The FTC’s complaint alleges that DIRECTV’s premium channel subscription service amounts to a negative option feature that fails to adequately disclose all material terms associated with the service.  Additionally, the Commission claims that DIRECTV did not obtain the express informed consent of its customers before charging them for access to premium channels.

The FTC has asked the court to: (1) redress consumer injuries by rescinding their contracts and/or refunding their payments; and (2) permanently ban DIRECTV from engaging in the allegedly illegal conduct in the future.

Monitor Your Marketing and Sales Practices

As evidenced by this lawsuit, the FTC continues to take legal action against media companies for claims made in connection with their advertising and billing practices.  It is critical that service providers and marketers remain abreast of ever-evolving regulations in the sales and marketing space, or risk bearing substantial liability.

If you are a media service provider, a marketer of such services, or if you have been served with legal process relating to your marketing practices, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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Related Blog Posts:

FTC Settlement Order Bans Negative Option-Billing Operation; Orders Defendants to Pay Almost $10 Million

DIRECTV Named in Multi-Million Dollar Class-Action TCPA Lawsuit

Warning: FTC’s “Operation Full Disclosure” Targets Over 60 TV and Print Advertisers for Alleged Deceptive Marketing

DirecTV Named in Multi-Million Dollar Class-Action TCPA Lawsuit

by David Klein

pa-telecomIn the marketing space, the Telephone Consumer Protection Act (TCPA) is dominating the headlines.  By various accounts, TCPA lawsuits are up 40-60% in 2013, compared to the same period in 2012, and there appears to be no signs of this trend slowing any time soon.

DirecTV TCPA Lawsuit

On September 5, 2013, a TCPA lawsuit was filed against DirecTV, LLC (“DirecTV”), alleging that the satellite television provider placed multiple, unsolicited robocalls to consumers’ cell phones, offering its satellite television services.  In several instances, it is alleged that pre-recorded messages were left on consumers’ answering machines.  According to the complaint, DirecTV did not obtain express consent, written or otherwise, from any of the consumers contacted.  Remember, beginning October 16, 2013, express written consent must be unambiguously obtained from consumers prior to making a marketing robocall.  Moreover, it is alleged that consumers contacted DirecTV several times requesting not to be called again and that such requests went unheeded.

The class-action TCPA lawsuit is seeking damages of up to $1,500 for every call made to consumers in violation of the TCPA.  The plaintiff alleges that the potential class size of consumers affected is at least 100,000 consumers across the country.  The next hurdle for the plaintiff is to certify the class of consumers contacted by DirecTV in violation of the TCPA.

In light of the potential class size, and the strict compliance provisions of the TCPA, if the plaintiff’s class is certified, a settlement appears inevitable.

TCPA Penalties

What is interesting about this case is that Plaintiff is demanding $1,500 per TCPA violation, which is the maximum amount of statutory damages allowed under the TCPA.  As you may recall, the TCPA provides for either actual damages or statutory damages ranging from $500 to $1,500 per unsolicited call and/or message.  It appears that the plaintiff is requesting $500 for each negligent violation of the TCPA and also $1,500 for every robocall made after DirecTV was contacted by consumers requesting to be put on the company’s do-not-call list.  While the amount of statutory damages awarded per violation is left to the judge’s discretion, judges have rarely awarded the maximum amount, unless there is clear evidence of willfulness or knowing misconduct on the defendant’s part.

TCPA Lawsuit Take Away

As we have previously stated on this blog, the best way for any marketer or advertiser to succeed in a TCPA lawsuit is to never be named in a TCPA lawsuit.  For a brief description of how to handle a situation in which a TCPA action is brought against you, please see our post entitled, How to Defend a TCPA Lawsuit.

If you are marketing products or services directly or indirectly via text message or robocall, you should be working with experienced telemarketing counsel on a regular basis.   Working with counsel fully familiar with the intricacies and nuances of the TCPA and telemarketing, to advise you about acceptable marketing practices on an ongoing basis, will go a long way toward making sure a class action complaint, or regulatory complaint, never gets filed in the first place.

This topic should be of interest to any company or individual engaging in a commercial venture within the United States, especially those involved in online and offline marketing, text message marketing, telemarketing, and/or consumer product industries.

If you are interested in ensuring that you are compliant with current regulations or if you are facing an investigation from the FCC or other regulatory agency, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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