States Settle Investigation With Satellite Provider Over Sales Practices

Attorney General Spitzer today announced a settlement with one of the nation's leading satellite television service providers that will refund millions of dollars to consumers across the nation.

EchoStar Communications Corporation, based in Littleton, Colorado, reached a resolution with 13 states regarding its Dish Network sales practices after numerous consumer complaints.

The states commenced an investigation of EchoStar during the summer of 2001 after hundreds of customers complained that EchoStar had assessed a $240 fee when they canceled service during their one-year contract. Customers claimed that EchoStar failed to reveal this termination fee when they signed up for the Dish Network.

EchoStar also had refused to refund any amounts that customers prepaid for a year's worth of service. Customers further complained that EchoStar automatically charged their bank accounts or credit cards without their authorization when it assessed these undisclosed fees.

"Companies seeking to do business in New York must adequately disclose all material information prior to purchase so consumers can make informed decisions," said Spitzer.

In settling the investigation, EchoStar agreed to pay a total of $5 million, including $3 million for consumer restitution. New York will receive more than $230,000 for restitution and $100,000 to cover the costs of its investigation.

The settlement requires EchoStar to disclose clearly and conspicuously all fees for which customers will be held liable, including those associated with early cancellation. In addition, under the terms of the settlement, future customers who seek to cancel service prior to their contract's termination will have the option of paying the lesser of the contract balance or the termination fee.

The settlement also requires Echostar to provide more comprehensive, specific information about the following: all assessed fees; procedures for cancelling service and automatic contract

renewal provisions; rescission periods offered under federal, state or local law; procedures for obtaining rebates; and whether a dish advertised in a promotion is reconditioned and the conditions under which it is available.

Finally, EchoStar is required under the settlement to:

• Implement procedures to protect customers from unauthorized charges on their accounts;
• Provide clearer disclosures of the charges that will be assessed to a customer's bank account or credit card account;
• Establish a convenient system for customers to cancel their service; and
• Establish a system for receiving and resolving customer complaints in a prompt manner.

Joining New York State in settling the case with Echostar are: California; Colorado; Connecticut; Florida; Georgia; Illinois; Louisiana; Minnesota; New Jersey; Ohio; Oregon; and Wisconsin.

This case was handled for New York State by Assistant Attorneys General Enver Acevedo of the Telecommunications & Energy Bureau and Shirley Stark of the Consumer Frauds and Protection Bureau.