FTC $4bn lawsuit on DirecTV underway

It is early days in the trial in Oakland, California, between the US Federal Trade Commission (FTC) and DirecTV, where the FTC is alleging that DirecTV deliberately misled subscribers signing up for pay-TV packages.

The complaint specifically alleges violations both of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which imposes specific requirements on negative option offers on the internet.

The trial, before a single judge and without a jury, opened with FTC officials saying the $3.95 billion claimed was the approximate amount earned by DirecTV from the alleged misleading promotional activity. The FTC admitted the sum being claimed was large but that was because DirecTV’s conduct affected many people.

AT&T, which owns DirecTV, in its submission stated that customers who came back with subsequent subscriptions could hardly have been deceived. However, not helping matters were admissions by AT&T that some customers were confused by the broadcaster’s billing and pricing practices.

Also potentially damaging was the testimony of DirecTV’s former chief sales and marketing officer Paul Guyardo, who told the court that he had instructed his team to place the legal disclosures at the bottom of the page in small print.  A number of e-mails were presented from his team members expressing concerns and Guyardo told them to proceed because he didn’t think the disclosure needed to be prominent at that point in the marketing campaign.  The requisite size and location of disclosures for promotional offers is at the heart of the FTC’s case against DirecTV.

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