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DirecTV Takes Disputed Fees Out of Customer Accounts, Suit Charges

Suit seeks to stop further collections until matter is litigated

September 25, 2009

The motion for a preliminary injunction notes that DIRECTV is systematically withdrawing the fees of up to $480 – which the lawsuit contends are unlawful – from customers’ accounts without their knowledge or permission. The withdrawals have caused consumers’ accounts to be overdrawn, customers’ checks to bounce, over-limit penalties to be assessed and their credit reports to be harmed as a result.

The DIRECTV customers who brought the lawsuit on behalf of current and former California DIRECTV customers asked the court to bar the company from collecting the disputed fees in this manner until the court determines whether the fees themselves are lawful.

DIRECTV charges its customers an “early cancellation penalty” when they terminate their service before what DIRECTV calls the “term commitment” period, typically eighteen to twenty-four months, is over. This “early cancellation penalty” is charged regardless of the reason for the cancellation. The lawsuit contends that DIRECTV fails to disclose this penalty to new customers or to existing customers who replace their equipment or add a new receiver, and that these practices are unlawful.

“These days, many families are struggling to make ends meet. Now is the last time DIRECTV should be plundering people’s financial accounts to pay a fee that we believe is unlawful,” said Harvey Rosenfield, founder of the non-profit Consumer Watchdog, who, along with Litigation Director Pamela Pressley, is one of the attorneys in the case. “The DIRECTV customers that we represent had no notice that this ‘early cancellation penalty’ would be directly withdrawn or charged to their accounts without any advance warning or opportunity to dispute the charge, leaving them caught completely by surprise when they discovered after the fact that the money was taken from their accounts,” stated Pressley.

“The company’s unauthorized seizure of people’s money from their bank accounts jeopardizes the fragile financial status of these customers, and since DIRECTV has refused our request to stop collecting the fees in this manner, we are asking the court to prevent it from doing so,” said Jennifer Steinberg, another attorney on the case.

“I was shocked and appalled to find that, after having been a loyal DIRECTV customer for over seven years and cancelling my service because of problems with my equipment and terrible customer service, DIRECTV had taken money directly from my bank account,” said Mary Cox, a putative class member in this litigation. Cox continued, “this fee caused my account to go into overdraft, thereby resulting in my bank charging me overdraft fees. I spent countless hours trying to get the charges reversed with my bank. This is money I need to pay for my groceries and other bills.”

“It's outrageous for a company to be able to deduct money from its customers personal checking accounts without their written or verbal consent. This unlawful practice needs to be stopped,” said Ingrid Evans, counsel for two of the representative DIRECTV customers in the suit.

In a complaint filed last September in Los Angeles Superior Court on behalf of current and former California DIRECTV customers who were charged an early cancellation penalty, Los Angeles resident Kathy Greiner explained that when her DIRECTV receiver stopped working, she ordered a new one. It began experiencing problems, but DIRECTV would not resolve the problem.

So Greiner, a six-year customer of the company, cancelled her service and returned the equipment. DIRECTV subsequently levied a $240 “early cancellation” penalty on Greiner, which the company took directly from her bank account (after deducting some amounts she had previously paid) without her knowledge or permission.

Greiner’s complaint was later consolidated with another lawsuit brought by Amy Imburgia and Marlene Mecca, also California residents. The joint lawsuit, Imburgia, et. al, v. DirecTV, Inc., alleges that DIRECTV failed to disclose to customers that it imposed an 18 or 24 month term of service and that cancellation before the end of the term would result in enormous penalty fees. The company would also automatically extend the “contractual obligation” by another 18 to 24 months if malfunctioning equipment needed to be replaced or the customer decided to make a change to programming or other services. These policies were not properly disclosed to purchasers beforehand, and consumers did not agree to them, the suit states.

Reader complaints

ConsumerAffairs.com regularly receives complaints from readers that they've been unknowingly roped into contract renewals with DIRECTV. Here's a sample: .

• Robert of Wirtz, Virginia, tells ConsumerAffairs.com that after he canceled his DIRECTV service six months into his contract, "I was informed that I would receive a final bill after cancellation. Funds of $195.90 were deducted (snatched) from my bank account, without prior notice. I went to my bank and was going to try and stop this transaction. My banker called and tried but it had already gone through. So I had to put this amount of money back in my account to prevent a shortage. No one at DIRECTV was remotely interested that I hadn't been notified in advance."

• Justin of East Falmouth, Mass., says he cancelled service due to poor customer service, poor quality, and poor business practices even though he knew the cancellation fee would cost him more than $300. He wrote ConsumerAffairs.com, "I called and authorized DIRECTV to charge 40 dollars to my debit card. The following morning I had a charge for 180 dollars to my account. When I called DIRECTV to complain, the first call I was hung up on, the second call I was told a supervisor was unavailable and there was nothing they could do as I had authorized the payment, when I asked for copies of the recorded phone conversation they said they had none, the third call said it would take between 8-16 business days to refund the 140.00."

• Heather of Simi Valley, California, tells ConsumerAffairs.com that she learned about DIRECTV contracts the hard way: "A few months ago, DIRECTV installed a new HD DVR in our home. What we didn't know was that signing the work order also threw us into another contract with them, beginning that day. When we called to cancel our service with DIRECTV...we were told we could not cancel until next year or pay a $240 cancellation fee. We were shocked! I think it's horrible that DIRECTV would trick their customers this way. We've contacted a lawyer to find out if we can fix this and keep it from happening to others.

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