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November 29, 2018

Satellite TV companies to pay Iowa $52,000 for consumer fraud violations

Attorney General investigations result in sales restrictions for three out-of-state sellers

DES MOINES -- When shopping for satellite TV providers, consumers need a finely tuned antenna to avoid bad deals.

The Iowa Attorney General’s Office has settled with three satellite TV companies this fall after accusing the companies of violating the Iowa Consumer Fraud Act. The settlements resulted in a total of $52,000 for the state Consumer Education and Litigation Fund, as well as refunds for consumers and restrictions on future sales.

First Choice Communications, a DIRECTV retailer based in Mesa, Ariz., agreed to a consent judgment signed Nov. 28 by Polk County District Judge David May. The company was ordered to notify the Attorney General in writing five days before returning to Iowa to sell its product. The company was also ordered to pay the state $5,000, follow Iowa’s Door-to-Door Sales Act and not make misrepresentations to customers.

First Choice sold TV packages to customers at the Iowa State Fair in 2015 and 2016.  In a petition filed in May, the Attorney General alleged that First Choice and its CEO, Michael S. Griffith, and owner, Kristal J. Jacobs, violated Iowa law by making several misrepresentations to customers, including falsely representing to customers that the price of merchandise would be lower than what was ultimately billed and saying that customers could switch TV providers for free. The petition alleged that First Choice also failed to provide Iowans with a three-day notice of their rights to cancel. 

One Iowan who purchased from First Choice at the Iowa State Fair in 2016 told investigators in a formal written complaint that he was promised a premium-channel package for $90 a month for two years. Without notifying the customer, the company changed his package on December 2016 and increased his bill to $160 a month, he alleged.

DIRECTV refunded $11,960 to Iowans as result of the AG’s investigations into First Choice.

Other recent cases

IKONIK LLC: Another satellite TV provider, IKONIK, agreed to offer free cancellations to about 500 Iowans and refund cancellation fees to those who had paid. The company will also pay the state $8,000.

The Attorney General had accused the Utah-based company of making misrepresentations to customers over contracts, improperly assessing cancellation fees, and failing to provide Iowans with a three-day notice of their rights to cancel. 

The company disputed the allegations but fully cooperated with the Attorney General’s investigation and agreed to resolve the matter through an Assurance of Voluntary Compliance completed Nov. 1. IKONIK agreed to follow the state’s door-to-door law and not to misrepresent terms of its contracts.

Xcite Satellite: In October, the state signed an Assurance of Voluntary Compliance with Xcite of Orem, Utah. The company agreed to offer to refund money or cancel contracts for more than 1,100 Iowans after the Iowa Attorney General’s Office accused it of violating the Iowa Consumer Fraud Act. 

Xcite used door-to-door salespeople to sell DirectTV and Viasat services. The Iowa Attorney General alleged that Xcite violated the Iowa Door-to-Door Sales Act and other laws by misrepresenting its business and its services, failing to provide consumers with a three-day notice of right to cancel, and improperly assessing early cancellation fees and other violations.

Xcite agreed to pay $40,000 to the state’s Consumer Education and Litigation Fund.

Tips for consumers

Here is some advice when considering satellite TV packages or other services:

Know your rights: The Iowa Door-to-Door Sales Act applies if a sale is for more than $25, if the sale is made at a location other than the seller's place of business, and if the goods or services will be used for personal, family or household purposes. Under the Act, Iowa consumers must be given written and oral notice that they have three business days to cancel a purchase for any reason, and they must be told the procedure for cancellation. Iowa consumers must also be provided with two fully completed notice of cancellation forms filled in by the salesperson, which consumers may opt to use to cancel door-to-door purchases.

Know your TV provider: Are you dealing with the provider directly or a third-party seller? Third parties sell contracts for providing installation and service (generally for satellite TV). If you are considering ordering services through a third-party seller (including phone service providers who provide package deals for satellite TV service), make sure you know where the seller does business, how to contact the seller and provider, and who is responsible if you are unsatisfied with the installation, service, or price. Get everything in writing, including any promises you may hear from a provider or third-party seller.

Carefully review promotional and introductory offers: Understand exactly what a provider is offering and charging — now and later — through a promotional or introductory offer. That includes introductory rates (so-called “teaser rates”) for new subscribers that expire at some point, and program bundling — the practice of offering channels as packages and not individually. Be sure you are clear about all upfront charges, any monthly equipment charges, when the promotional rate ends (mark your calendar!), when the full rate begins, and how much the full rate will cost. Make sure you understand how long you can evaluate your service, including the signal quality, before you can cancel without facing a penalty. If you do not want to continue subscribing to premium channels that were included only in an introductory package, be certain you understand whether you must contact the provider at the end of the introductory period.  Failing to cancel unwanted premium, promotional channels will add cost to your service. The need to cancel, and terms and conditions, should be clearly stated in the provider's service agreement.

Read your monthly bill: Are you getting charged for something you didn’t request or getting overcharged for something you didn’t order? Review your monthly bill to find out. If you have a billing dispute, contact your service provider.

Check out early termination fees: If you are thinking about stopping your service, first check your service contract or contact the provider to find out if you are subject to an early termination fee. If a provider charges you a termination fee without your knowledge or authorization, dispute the matter with your provider or credit/debit card issuer.

Monitor service issues: If you have a problem with your signal, contact your provider—particularly if you are in a trial period. (Satellite TV customers can experience signal difficulties if there are obstructions, including buildings, and trees.) Make sure you are fully satisfied before your trial period ends. If you contact a customer service representative, note the date, time, person you spoke with, and a summary of what occurred.

Report unfair practices: If you believe a service provider or third-party seller has engaged in an unfair sales practice, billing practice or consumer fraud, contact the Federal Trade Commission at ftc.gov/complaint or the Consumer Protection Division at 515-281-5926, or outside of the Des Moines area at 1-888-777-4590, or email to consumer@ag.iowa.gov . Find more information on filing a complaint here.

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