Federal regulators on Wednesday accused satellite giant DirecTV of deceptive advertising for not clearly disclosing that a discounted 12-month package required a two-year contract that included a rate hike and large early cancellation fee.
The Federal Trade Commission said there were other misleading practices in DirecTV's offers regarding free premium channels.
The government's suit seeks a court order to stop the practices and an unspecified amount of money for customer refunds.
"DirecTV sought to lock customers into longer and more expensive contracts and premium packages that were not adequately disclosed," said Edith Ramirez, the agency's chairwoman.
"It's a bedrock principle that the key terms of an offer to a consumer must be clear and conspicuous, not hidden in fine print," she said.
DirecTV, of El Segundo, has violated federal law "in many instances since 2007" by "making deceptive claims or omissions of material facts in advertisements and on its website," the agency alleged.
The company, which has about 20 million subscribers, failed to "clearly and prominently" disclose that a $25-a-month package for 12 months required a two-year contract in which the monthly price increased to $45 in the second year, the agency said.
Customers who wanted out of the deal had to pay an early cancellation fee of as much as $480.
Also, an offer for three free months of premium channels such as HBO and Showtime didn't adequately disclose that customers would automatically be charged for them after the trial period unless they called to cancel.
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