Judge says commission failed to prove 'ditch cable' ads were deceptive

A California U.S. District Judge has ruled that the Federal Trade Commission failed to prove DirecTV's TV, print, or electronic banner ads in its "ditch cable" campaign were unfair or deceptive or contained affirmatively false info.

It has yet to weigh in on whether the satellite operators' web site info was misleading or deceptive, so the case is not quite over. But FTC's case was dealt a big blow.

That came in a decision by Haywood Gilliam Jr., U.S. District Judge for the Northern District of California. That substantially reduced the potential for the FTC to collect a big settlement related to still-outstanding charges its website was deceptive. "[T]o the extent the FTC’s case is based on anything other than Defendant’s website, the scope of the maximum potential recovery in this case has been substantially curtailed," Gilliam wrote in the decision.

"The FTC’s ambition in attempting to show that over 40,000 advertisements were likely to deceive substantially exceeded the strength of its evidence," he said.

The decision followed a trial during which DirecTV did not provide a defense, but instead following the FTC presentation of its case filed a motion for a decision that the FTC had not made its case.

At issue was the FTC's allegations that DirecTV had failed to disclose to customers that "(1) the introductory discounted price only lasts 12 months, after which the subscriber is charged the then-prevailing rate; (2) the subscriber is subject to a 24-month commitment period; (3) a subscriber who cancels before the end of the commitment period is assessed an early cancellation fee of $20 per month for the remaining months in the commitment period; and (4) subscribers receive a free premium channel package (e.g., HBO, Starz, Cinemax, and Showtime) for three months, but must affirmatively cancel these premium channels before the end of the three-month period to avoid monthly charges (the 'premium channel negative option')."

The FTC also contends that DIRECTV "failed to clearly and conspicuously disclose the premium channel negative option on its website," the issue that remains to be resolved.

“We’re pleased with the Court’s decision and look forward to resolving what remains of the case," DirecTV parent AT&T said in a statement.

The court has scheduled a conference with the FTC and AT&T for Sept. 4 to discuss plans for completing the trail on the website issues, or alternatively, "whether the parties believe that renewed settlement discussions would be productive in light of the Court’s findings and conclusions."

In March 2015, the FTC charged DirecTV with deceptively advertising discounted 12-month packages of service, suggesting its "ditch cable" campaign also ditched some of the facts. DirecTV said the FTC was "flat out wrong."

The FTC was seeking a court order permanently barring DIRECTV from engaging in the allegedly illegal conduct, as well as a monetary judgment to refund consumers.

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