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December 16, 10

NEWS / Attorney General Announces Multi-State Settlement with DIRECTV Over Allegedly Deceptive, Unfair Sale

TRENTON – Attorney General Paula T. Dow announced today that New Jersey has entered into a multi-state settlement agreement with DIRECTV that resolves allegations the satellite television provider engaged in deceptive and unfair business practices.

In addition to paying the 50 states a total of $13.2 million, the California-based DIRECTV has agreed to pay restitution to consumers and to alter its business practices in the future.

Among other things, DIRECTV has agreed to clearly disclose to consumers all material terms of contracts, including price, commitment term, rebate instructions and termination/equipment return fees. The company has also agreed to replace leased equipment that is defective at no cost, except the cost of shipping, to clearly disclose all limitations on the availability of local channels, and to not misrepresent the availability of sports programming.

In 2005, DIRECTV entered into a settlement agreement with New Jersey and 21 other states regarding a number of sales and advertising issues. In 2008, a working group of the states was formed to investigate the company’s compliance with that agreement. During the investigation, the working group examined consumer complaints and identified a number of concerns regarding DIRECTV’s sale and maintenance of satellite television services. The settlement announced today addresses those concerns.

In addition, through the Division of Consumer Affairs, the State worked with DIRECTV prior to the settlement to resolve 280 complaints filed by New Jersey consumers. The resolutions were handled on a case-by-case basis, and included refunds or credits, or other relief, as appropriate. It is anticipated that complaints submitted to DIRECTV post-settlement – including complaints recently received by the Division of Consumer Affairs and complaints received after the settlement is filed -- will be handled in a similar fashion.

Unresolved complaints that involve conduct addressed in the settlement, and which occurred after January 1, 2007, are eligible for the restitution program. In addition, consumers can file a complaint with DIRECTV or the Division of Consumer Affairs by June 9, 2011, to be considered for the restitution program as long as the complaint pertains to activity that occurred after January 1, 2007. DIRECTV has agreed to attempt to resolve the complaints working directly with consumers. Complaints that cannot be resolved by DIRECTV will be submitted to a third party Claims Administrator for resolution.

DIRECTV is one of the nation’s largest providers of satellite television service. Generally, the company leases equipment to a consumer in exchange for the consumer’s agreement to purchase a minimum level of DIRECTV services for up to two years. As of the end of 2009, DIRECTV had more than 18.5 million subscribers throughout the country.

Complaints about DIRECTV received by New Jersey and the other states included that the company:

* Did not clearly disclose the price that consumers would be charged and the commitment term that consumers would be required to keep
* 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
* Offered cash back to consumers but then provided the consumer with bill credits instead.

Under terms of the settlement announced today, New Jersey will receive $185,000 to be used to cover attorneys’ fees and investigative costs, and to support future consumer protection efforts. Deputy Attorney General Nicholas Kant, of the Division of Law’s Consumer Fraud Prosecution Section, represented New Jersey in the DIRECTV matter.




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