Image: DirecTV satellite receiver dish
Reed Saxon  /  AP
Because of all the complaints and how they are handled, the BBB gives DirecTV has an F.
By Herb Weisbaum ConsumerMan
msnbc.com contributor
updated 8/12/2010 11:56:42 AM ET 2010-08-12T15:56:42

Satellite TV companies love to compare themselves to cable. They promise lower prices, more programming choices and better overall service. And if you talk to past cable customers who’ve made the switch to satellite, many will tell you they’d never go back.

Here’s a reality check: Huge numbers of satellite subscribers have complained to the Better Business Bureau about surprise fees and confusing terms.

TV tips

“There are lots of issues out there for consumers about their satellite TV service,” says Alison Southwick with the Council of Better Business Bureaus. 

During the last three years, the BBB received 53,000 complaints about satellite TV services: about 39,000 for DirecTV and about 13,000 for DISH Network.

“Early termination fees are a huge source of contention,” Southwick says. “If you’re not satisfied with the service or you can’t afford the cost after the introductory period, you can’t walk away, because you’re going to get charged hundreds of dollars. This just makes the unhappy customer even more upset.”

Satellite services have long-term contracts and charge an early termination fees for the same reason wireless phone companies do. It lets them provide customers with expensive equipment and installation at a much lower up-front cost.

But there are other significant problems. Many complaints deal with advertising and billing issues. The introductory offer, a commonly used promotion, gives the new customer a reduced monthly rate or free premium channels for a certain length of time. Once the promotional period ends, the prices go back to normal. Some customers claim that price increase was substantially more than expected. Others say they were charged for services that were advertised as free.

Because of all the complaints and how they are handled, the BBB gives Dish Network a C+ rating. DirecTV has an F. When asked to comment on this, both companies told me they provide excellent service.

“Admittedly, we don’t get it right every time and when we find there’s an issue we try to remedy it as soon as possible,” says DirecTV spokesman Darris Gringeri. “We’re working to fix these issues.”

Dish Network’s corporate communications manager Francie Bauer wrote me, “We appreciate the need to address customer concerns in an effective and timely manner and we will continue to work with the BBB to respond to and resolve these issues as quickly as possible.”

Does DirecTV violate the law?
A few weeks ago, the Miami-Dade Consumer Services Department sued DirecTV, accusing the company of using a number of deceptive practices. The lawsuit alleges the company ran “false and misleading advertisements” about the cost of service packages and equipment and failed to properly disclose the terms of the contracts.

Sonya Perez, the department’s public relations specialist, says her office reviewed DirecTV’s ads and found they did not give the complete prices of products and services. The complaint states they were “phrased in a way to unfairly induce consumers to purchase DirecTV Packages.”

For example, customers who signed up for the $34.99 per month service package were billed $55.99, the Consumer Services Department alleges. Those who chose the $39.99 per month bundle were billed $60.99 and those who purchased the $44.99 per month bundle were charged $65.99.

The lawsuit also claims DirecTV did not “clearly disclose conditions and limitations to their service agreements in advertisements or in any other type of communication with customers.” Additional fees were buried in fine print, such as a $5 monthly charge for a second receiver and a $6 charge for the “FREE HD DVR Receiver Upgrade.” 

Washington also sues
Last year, the Washington state attorney general’s office received more complaints about DirecTV than about any other company in the country. Unable to convince DirecTV to change its business practices, the state sued the company in December.

“Their business practices are unfair and deceptive,” says Paula Selis, the senior assistant attorney general handling the case.

Here are three typical complaints from Washington state residents that are included in the lawsuit:

  • John Tellesbo saw ads for “free premium movie channels” such as HBO and STARZ. But he said when he signed up for DirecTV, he was never told the free trial would automatically turn into a paid subscription. He said he assumed the channels would just stop once the three-month trial period ended. Instead he was billed for them. Tellesbo contacted the company and was refused a credit. He got a refund after he filed a complaint with the attorney general’s office.
  • Marie Merbach says DirecTV’s “free installation” offer appealed to her. She said the customer service person who scheduled the installation appointment also made it clear the work was free. But when the installer attached the dish to the side of her house, he demanded $75. Merbach complained, but DirecTV would not refund the money.
  • Arlene Osborn ordered a $29.99 per month service package. But her bills were for $48.41. After several months, Osborn called DirecTV and was told she had to mail in the rebate coupon she’d been sent to get the lower price. Osborn insists she was never told this when she signed up for the service and never got the coupon.

In its lawsuit, Washington state claims that important information about the terms of service is not always disclosed. Assistant AG Selis says sometimes DirecTV uses what she calls “mice type” – print is so small the average person can’t read it.

How does DirecTV respond to these two lawsuits?

“We have a regular dialogue with the states to address incoming customer issues, but beyond that we cannot comment,” says spokesman Darris Gringeri, who challenges the accusation that customers are not always told what they are signing up for.

“We make it clear about that agreement in the advertising and marketing materials,” Gringeri says. “It is in readable print, not fine print. The customer is also told during a sales call or online ordering. There is a confirmation letter, confirmation e-mail and final review of the terms at time of installation. We make sure they are fully informed.”

The BBB can’t always help
The Better Business Bureau tries to resolve complaints against Dish Network and DirecTV. But  it isn’t always successful. That’s why it’s important to read the contract carefully. Make sure you understand all the terms about price increases, length of contract, early termination fees, plus all the details of a promotional special, before you agree to the service.

ConsumerMan Tip: If you plan to upgrade service or equipment, find out if that will extend your contract for another two years.

© 2013 msnbc.com.  Reprints

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