FTC's $4 Billion Lawsuit Against DirecTV Gutted by Judge

(Bloomberg) -- The U.S. Federal Trade Commission failed to convince a federal judge in San Francisco that DirecTV should pay nearly $4 billion in restitution to customers for allegedly misleading consumers about the costs of programming packages.

The judge didn’t eliminate all of the FTC’s false advertising claims but made clear that “the scope of the maximum potential recovery in this case has been substantially curtailed.”

“This case did not involve the type of strong proof the court would expect to see in a case seeking nearly $4 billion in restitution, based on a claim that all of DirecTV’s 33 million customers between 2007 and 2015 were necessarily deceived,” U.S. District Judge Haywood Gilliam said Thursday.

The ruling follows an August 2017 non-jury trial of the FTC suit, alleging that DirecTV failed to adequately disclose to consumers in 40,000 print, mail, online and TV advertisements that its lower introductory pricing lasted just one year but tied buyers to a two-year contract.

The FTC also alleged the subscription television service failed to alert customers that its offer for 90 days of premium channels required them to cancel the subscription to avoid continuing monthly charges.

While the judge deferred on the agency’s allegations that DirecTV misled consumers on its website, he said there remain a number of problems with the FTC’s theories for relief and that the FTC “has an uphill climb.”

DirecTV was acquired by AT&T Inc. for almost $50 billion in 2015.

The case is FTC v. DirecTV, 15-cv-01129, U.S. District Court, Northern District of California (San Francisco).

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