The Federal Trade Commission ("FTC" or "the
Commission") has clearly subscribed to enforcing ROSCA
recently. On Tuesday, the FTC filed a complaint against DIRECTV's negative
option program and contract pricing structure under Section 5 of
the FTC Act and ROSCA.
In the complaint, the FTC alleged that DIRECTV required
customers to agree to a mandatory 24-month contract to receive
television programming; customers who canceled their subscriptions
before 24 months were charged an early cancellation fee.
Although the rates were set at a specific monthly charge for
the first year of a 2-year customer agreement, in the second year
of the agreement, the FTC alleged that DIRECTV would increase the
monthly charges by 50-70% higher than customers paid in the first
year. After the first year of the agreement, customers either
had to pay significant cancellation fees or pay the higher monthly
price.
