Published on March 10, 2020 by the FairShake Team
According to Ars Technica, a lawsuit against AT&T claims its executives were incentivizing sales representatives to create fake DirecTV Now accounts for customers to make the service appear more successful than it really was.
Confidential witnesses, including former AT&T sales representatives, claim customers coming into the AT&T stores for other reasons would be misled into adding DirecTV Now to their accounts, sometimes covertly as part of other hidden fees and reactivation charges.
According to Ars Technica:
“[S]ales reps told customers that there was a $35 activation fee and that their purchase came with one to three months of DirecTV Now for free, the complaint said…AT&T employees ‘would then waive the activation fee on AT&T’s system but would not tell the customer they were doing this. Instead, [they] would charge the amount of the activation fee to the customer but apply that money to the DirecTV Now subscription.'”
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More from Ars Technica:
AT&T “promot[ed] and reward[ed] account fraud” such as creating the fake accounts and signing AT&T customers up for DirecTV Now “without the customer knowing,” the lawsuit claims.
The new allegations were made Friday in an amended complaint as part of a lawsuit filed against AT&T in April in US District Court for the Southern District of New York. The lawsuit alleges that AT&T lied to investors in order to hide DirecTV Now’s failure.
“AT&T misrepresented the true condition of DirecTV Now and hid the associated risks,” the amended complaint says. DirecTV Now’s inevitable failure was subsequently made clear when subscriber numbers began to drop, the amended complaint says:
“The dramatic decline in DirecTV Now subscriber numbers was a materialization of the risks associated, including: improper sales practices, such as the creation of fake accounts, which predictably led subscribers to cancel these accounts, upon realizing they were being billed for a service they did not use; the aggressive use of promotional campaigns to artificially sustain subscriber levels; and selling the product at irrationally low prices that would ultimately need to increase.”
The lawsuit seeks certification of a class consisting of all people who acquired AT&T common stock in connection with the Time Warner Inc. acquisition and all people who acquired AT&T stock between September 21, 2016 and January 30, 2019. When AT&T bought Time Warner in June 2018, Time Warner shareholders’ stock was converted into AT&T stock. The lawsuit claims that AT&T issued those shares pursuant to a registration statement with the SEC that lied about DirecTV Now’s performance.
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