My turn to deal with a bogus DirecTV early termination fee, and why we need a ‘Department of Leaving Scams’

Where did that come from?
Where did that come from?

DirecTV has wasted a lot of my time this week, and it tried to take a lot of my money, too.  I’ll fill you in on the details below, but you already know the story.  I canceled service. I was told my bill was paid. Months later I was hit with a mysterious early termination fee. When I called to complain, I was accused of lying and hung up on.  It must be really, really tough working for DirecTV.

So I’m here to tell you that if you choose to do business with DirecTV, do it with your eyes open.

But that’s not the only way the TV giant with the funny commercials wasted my time.  No, the firm has wasted my time as a journalist in a way I have never seen during 25 years of reporting. I can’t find anyone to speak for the company.  I’ve looked on DirecTV’s website.  Nothing. I’ve sent emails to every PR contact I could find at AT&T, which bought DirecTV last year. Dead silence.  I’ve looked up press releases from the company, which nearly always include a contract person (“4K Coverage of Notre Dame Football!“). Blank. I  wanted to give the firm a chance to explain itself.  But no luck. I guess the firm is too busy explaining itself to the Federal Trade Commission.  But you get the distinct impression that DirecTV is really, really sick of hearing from angry customers.

(Please, when you read this story, DirecTV, feel free to write me.  I’ll add your side of the story.)

But first, let me assure you this isn’t a whiny story about my latest Gotcha encounter. This is a call to arms. Please, federal regulators, save capitalism for us. Let me explain.

Competition is capitalism’s guardian angel.  It’s the only thing that ultimately keeps bad actors in check.  It lets the cream rise to the top.  It makes smart people rich.  It lowers prices. It improves quality.  It makes people strive.  Everyone supports the idea of competition.  In theory.  Every time I bring up the need for stronger federal agencies to keep businesses in line, folks who disagree say the free market will take care of itself, as consumers bail on the bad actors. I think that’s overly simplistic, but it’s certainly a legitimate line of argument.

But one thing is absolutely critical to capitalism, and to this “vote with your feet” concept. It has to be easy to leave.

One horrible truth about 21st Century Capitalism is it’s very easy to sign up for things, but often very hard to cancel things. And often, on your way out the door, companies kick you in the A$$ and steal your lunch money. It’s obvious why companies do this.  Once you have declared yourself no longer a customer, they have no incentive to treat you well, or fairly.  So they grab as much of your cash as they can as you leave.

This is bad. It’s annoying for you, but it mucks up the machine of capitalism.  Economists call this “switching costs.” There’s a reason you don’t change banks every 6 months in search of better interest rates, or switch auto insurance providers; or Internet providers.  There is both a real and a perceived cost to switching. There’s your time. There’s the hassle.  And so, unless you are going to save a lot of money, consumers usually pick inertia.

That’s bad enough. You can see how this situations leads to companies taking advantage of lazy consumers. But when companies actually add a tax to make you leave, well, that’s purely anti-competitive.  Anything that de-incentivizes consumers to switch companies is bad for the way markets work.

And so, I declare that we need a new agency designed specifically to deal with consumer departures. A Department of Switching Advocacy. A Department of Leaving Scams.  A Free-Range Consumer Department. Or just, SWITCH!  (Someone Who Is There to free Consumer Hostages).  Call it what you want. But consumers who are mistreated by companies in diabolical ways as they try to exert their shopping around rights should have a place where they can immediately find redress.  SWITCH! should staff up with experts who are familiar with all the latest dirty tricks should be ready to help them.  The department needs real teeth, so consumers don’t have to wait months for refunds.

I firmly believe that SWITCH falls directly under the mandate of the Federal Trade Commission to promote free markets and prevent anti-competitive behaviors.

SWITCH will slowly but surely teach companies that dirty cancellation tricks aren’t worth the revenue.  But most most important, the chilling effect of leaving scams will be slowly lifted, and consumers will be quicker to ditch bad companies in favor of good ones. That’s in everyone’s interests.

The first rule this department should enforce is simple: Companies need to offer cancellation paths that are as easy to find and use as sign-up paths. No more “sign up online” but “you must call to cancel” tricks.

As for me and DirecTV, I had been a customer for many, many years. For the past several years, I’d enjoyed a pretty good rate of around $58 a month for basic service.  Slowly but surely, I stopped watching TV, but kept the service because I would occasionally use the login to watch ESPN or CNN on my laptop when traveling.  At some point, probably when I had some house repairs done, my dish stopped working; I didn’t notice and I didn’t care. I never watched my living room TV. Finally this summer, I decided to consider other options like SlingTV, and called DirecTV to see what it would offer.   It promised a lower rate, a few more channels, and to come out and re-point my satellite dish so it would work. I agreed.

When the home visit came, DirecTV’s technician tried and tried, but couldn’t get my dish to work.  The poor man spent about two hours trying. Chalk it up to the newly tall trees , I suppose.  But I called DirecTV and said I’d have to cancel.  That operator was lovely, and assured me I wouldn’t have to pay any kind of fees — in fact, I had a credit of about $30 which would arrive by check. Cryptically, however, she said this, as I recall:

“If they try to charge you cancellation fees, don’t let them!”

I had her name, a number, and email confirmation, so I didn’t worry about it.

Until Labor Day morning, when I awoke to an email saying DirecTV was about to charge my credit card $105.

I called, furious.  I told the operator who answered to look at the notes in my file saying I owed the firm nothing. She said she would try; but then said I was being charged an early termination fee.  For what, I asked? Early termination fees are generally associated with getting discounted equipment.  (I’m not a fan of ETFs, but they do make some sense — if a firm subsidizes equipment, and a consumer leaves early, it wants the subsidy back.)

But that didn’t apply in my case; my equipment was many years old.

Instead, the operator told me, the ETC was for the discount plan I was on. Naturally, I’d never agreed to that.  I had been on that same discount plan for many years. I told the operator this was unfair and outrageous. She accused me of lying about not being able to get service. I told her again to look at the notes in my file. She said she was still pulling them up. Then she hung up on me.

I then went scurrying around DirecTV’s website to see what kind of twisted logic might have been at work.  I had received a notice in January that my rates were going up $2, to $60.  Nothing in that notice I could find mentioned the rate was part of a discount attached to a term contract with an early termination fee. But separately, I found a page indicating that DirecTV was getting customers who negotiated discounts (always a good idea) into commitments that came with ETFS —  such as $20 per month for leaving early.

Based on that, I could only surmise that DirecTV was charging me for 5-ish months that I didn’t complete whatever agreement it decided I had with the firm.

I called back. The second operator I called was perfectly fine. She spotted the notes on my file right away  but said I’d have to talk to “billing.”  Once there, after several long waits, I was able to get the operator to refund the fee and send me a confirmation email.

I never got any explanation about where this fee came from, so I have just guessed. Again, let me remind you, I tried to give the company a chance to explain this, but have been unable to find someone to ask.

Days later, I got another email from DirecTV saying I owed it $105 (no kidding!). But the email said it was for a bill generated before my phone call.  My account login tells me I don’t owe anything, so I believe I am in the clear.  But I’ll keep you posted!

Again, wah wah wah I’m out nothing but a few blood pressure points and a little time.  I’m lucky I know my way around customer service folks, I keep good notes, and I was suspicious enough to keep an eye out for any DirecTV emails.  I worry about consumers who aren’t as lucky.

But I worry more about our country, because as we learned earlier this week, U.S. corporations are often built off perverse incentives that encourage employees to cheat consumers.  We have a long way to go to clean our economy of this trash.

SWITCH! would go a long way to help.

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About Bob Sullivan 1524 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

2 Comments

  1. Boy, does this sound familiar. I spent months trying to cancel my mother’s Direct-TV and it was like you said. No way to contact them to say I quit. Ended up spending lots of time and money for almost a full year. I still have Direct TV and terrified to have to deal with this problem when I try to change to another TV
    carrier.

  2. Wow, looks good, especially the end. I had been searching for that
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