Trial claims AT&T created fake accounts for juice DirecTV Now subscription numbers

admin September 17, 2019

16 2 minutes read

Trial claims AT&T created fake accounts for juice DirecTV Now subscription numbers

According to the lawsuit, employees – who met aggressive sales quotas – were "taught and actively encouraged" to convert the $ 35 activation fee that customers paid to upgrade their phones to the price of multiple DirecTV Now subscriptions. This was allegedly executed by "waiving the fee, but still charging the customer and applying the payment to up to three DirecTV Now accounts using fake email addresses."

The complaint alleges customers were not told that they had been registered for a subscription, and that the company is said to have received regular complaints from customers who said they were billed for accounts they did not sign up for. The complaint also describes other alleged methods of increasing subscriptions without the consent of clients.

The purpose of this effort, the lawsuit alleges, was to create the false impression that the service compensated for the decline in the legacy of DirecTV's satellite business, and to help justify the company's acquisition of Time Warner, now called WarnerMedia. WarnerMedia is CNN's parent company.

CNN Business asked AT&T ( T ) to respond to the cases in the lawsuit as well as comment on specific charges within it, alleging that the company pressured its employees by setting aggressive sales targets and encouraging employees to use unrelated fees to create DirecTV Now accounts.

"We plan to fight these baseless claims in court," AT&T said in a statement in response.

Plaintiffs include Local 449, a Pittsburgh-based union pension fund, and Melvin Gross, an investor who swapped Time Warner stock for AT&T shares as part of the acquisition.

DirecTV Now, which AT&T launched in late 201[ads1]6, was billed as a key part of the company's turning point. The lawsuit claims that executives, including CEO Randall Stephenson, were deceitful in claiming that growth in DirecTV Now was stable, driven by "organic" demand and limited campaigns.

But beyond the alleged inflation of subscriber numbers at the expense of unscrupulous consumers, the service also suffered from significant turnover as customers jumped from one reduced power service to another, according to the complaint.

The complaint says the plaintiffs and their attorneys spoke with a number of current or former AT&T staff who provided information about the alleged scheme. It refers to a former Michigan employee who reportedly estimated that around 40% to 50% of the customers he worked with started in early 2017, complaining about being billed for a DirecTV Now subscription they said they had not signed up for.

accusations come at what for a number of reasons is a sensitive time for the company.

Stephenson recently elevated WarnerMedia CEO John Stankey to a position that puts Stankey in line to succeed Stephenson should he resign. (Stankey is not alleged to have personally misled investors, but the complaint claims he should have known investors were misled.)

Next year, WarnerMedia plans to release its own streaming service, HBO Max, to a full market for a higher price than many of its competitors, including Disney + and Netflix, will charge. And Elliott Management, an activist hedge fund that has taken a $ 3.2 billion stake in AT&T, calls for changes, including possibly spinning DirecTV entirely.

The company specifically called DirecTV Now in a recent letter to AT & T's board, calling the service "poorly done" and pointing to the declining subscriber base.

At the end of the fourth quarter last year, AT&T reported that DirecTV Now had 1.6 million customers. It had 1.3 million as of July, according to the second-quarter income report.

On Tuesday at the Goldman Sachs Communacopia Conference, Stephenson responded to criticism that the company is too large and overpaid for its media companies. It still "makes sense" for the company to own both a large wireless network and content, he said.

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