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Sirius XM Reaches Multistate Consumer Protection Settlement
Practical Law Legal Update 6-591-6705 (Approx. 4 pages)
Sirius XM Reaches Multistate Consumer Protection Settlement
by Practical Law Commercial
| Published on 09 Dec 2014 • USA (National/Federal) |
Sirius XM recently agreed to a $3.8 million settlement with attorneys general from 45 states and the District of Columbia over allegations that Sirius engaged in misleading advertising and billing practices.
Sirius XM recently reached a $3.8 million settlement with 45 states and the District of Columbia to resolve claims that the satellite radio company engaged in misleading advertising and billing practices. The attorneys general from these states alleged that Sirius engaged in misleading, unfair and deceptive acts or practices in violation of state consumer protection laws by:
- Making it difficult for consumers to cancel contracts.
- Failing to honor cancellation requests.
- Misrepresenting that consumers' Sirius XM service would be canceled and not renewed.
- Automatically renewing contracts without consumers' notice or consent.
- Charging unauthorized fees and higher, unanticipated rates after a low introductory rate.
- Failing to provide timely refunds.
Under the terms of the settlement, Sirius has agreed to:
- Clearly and conspicuously disclose all terms and conditions at the point of sale, such as:
- billing frequency;
- term length;
- automatic renewal date; and
- cancellation policy.
- Make no misrepresentations about the available plans in advertisements.
- Provide advance notice via mail or email about upcoming automatic renewals for plans that last longer than six months.
- Revise the cancellation procedures to make it easier for consumers to cancel.
- Prohibit incentive compensation for customer service representatives based solely on how often they retain current customers who try to cancel.
In addition to the $3.8 million payment to the states, Sirius will also provide restitution to eligible consumers.
This settlement highlights that when dealing directly with consumers, a business must take into account not only federal laws protecting consumers, but also the consumer protection laws of each state in which that business operates. For more information on consumer protection laws, see Practice Notes, FTC Consumer Protection Investigations and Enforcement and Consumer Protection: Overview.