SiriusXM Radio (SIRI) must pay a steep financial penalty because of claims that it made life hard for millions of customers.
The satellite radio provider will pay $3.8 million to 45 states and the District of Columbia to settle charges it misled consumers, engaged in deceptive billing practices and created hurdles to canceling contracts, several attorneys general announced on Thursday.
The settlement includes a requirement that SiriusXM repay consumers who were hurt by the alleged practices and that the company change its business practices.
SiriusXM was accused of "misleading, unfair and deceptive acts or practices in violation of state consumer protection laws," according to Ohio Attorney General Mike DeWine, whose office led the multi-state case.
Among the allegations against Sirius: customers' cancellation requests were ignored; contracts were renewed without the knowledge of customers; extra charges were levied; rates were sharply increased without the knowledge of customers; and the company failed to provide refunds in a timely way.
"Consumers should be able to understand what they are purchasing and exercise their cancellation rights without hassle," DeWine said in a statement.
In the settlement, SiriusXM 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 lasting 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 "saves," or retaining current customers who attempt to cancel.
To qualify for restitution, consumers must file a complaint with their state attorney general in the next five months that involves the conduct addressed in the settlement, which took place between July 28, 2008, and Thursday, Dec. 4. The consumer also must show an actual loss that their state's attorney general has not already resolved.
Regarding the settlement, Patrick Reilly, SiriusXM senior vice president for communications, said:
"We are pleased to have reached agreements that resolve this investigation. The changes to our consumer practices that we agreed to are practices we have already implemented at SiriusXM. Under the terms of the settlements, we have agreed to provide, upon the request of the States, additional information about our consumer practices and to participate in a process designed to address any previously unresolved consumer complaints. In addition, we agreed to make a payment of approximately $4 million to the States that has no material financial effect on the Company."
The following states are party to the agreement in addition to Ohio and Washington, D.C.: Arizona, Alabama, Alaska, Arkansas, Colorado, Connecticut, Delaware, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.