A lawsuit claims AT & T has created fake accounts to reduce subscription numbers DirecTV Now

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According to the lawsuit, employees – faced with aggressive sales quotas – have been "actively trained and encouraged" to convert the $ 35 activation fee paid by customers for upgrading their phones at the price of $ 25. several subscriptions to DirecTV Now. This would have been done by "removing the charges, but charging the customer anyway and applying the payment to up to three DirecTV Now accounts using fake email addresses".

The complaint states that the clients were not informed that they had subscribed to a subscription and that the company had regularly lodged complaints from customers who claimed to have been billed for accounts for which they did not agree. were not registered. The complaint also details other alleged methods for increasing subscriptions without the consent of customers.

The lawsuit alleges that these efforts were intended to create the false impression that the service was offsetting the decreases in activity inherited from DirecTV satellites, and to help justify the company's acquisition of Time Warner, now WarnerMedia. WarnerMedia is the parent company of CNN.

CNN Business asked AT & T (T) to respond to the merits of the lawsuit as well as to comment on specific allegations, such as allegations that the company would have put pressure on employees by setting ambitious sales targets and encouraging employees to use unrelated fees to create DirecTV Now accounts.

"We plan to fight these unfounded accusations in court," said AT & T in a statement.

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

DirecTV Now, launched by AT & T in late 2016, has been touted as a key component of the company's pivotal entertainment business. The lawsuit alleges that executives, including CEO Randall Stephenson, were misleading in asserting that DirecTV Now's growth was stable and driven by "organic" demand and limited promotions.

But beyond the alleged inflation of the number of subscribers at the expense of consumers unintentionally, the service also suffered from a significant business turnover, customers going from bad to bad. one low-cost streaming service to another, according to the complaint.

The complaint indicates that the plaintiffs and their lawyers have spoken to a number of current or former employees of AT & T who have provided information about the alleged ploy. He is referring to a former Michigan employee who allegedly estimated that approximately 40% to 50% of the customers he had been dealing with at the beginning of 2017 complained of being billed for DirecTV Now subscriptions to which they were says do not subscribe.

The allegations arrive at which is for several reasons a delicate period for the company.

Recently, Stephenson elevated WarnerMedia President and CEO John Stankey to a position that would put Stankey in a position to succeed Stephenson when he was to retire. (The complaint does not claim that Stankey personally misled the investors, but the complaint alleges that he should have known that the investors had been misled.)
WarnerMedia plans to launch next year its own streaming service, HBO Max, in a saturated market at a price higher than many competitors, including Disney + and Netflix. And Elliott Management, an activist hedge fund that has acquired a $ 3.2 billion stake in AT & T, is demanding changes, including possibly the sale of DirecTV.

The company has specifically named DirecTV Now in a recent letter to the AT & T Board of Directors, calling the service "poor execution" and highlighting the decline in its subscriber base.

At the end of the fourth quarter of last year, AT & T announced that DirecTV Now had 1.6 million customers. It was 1.3 million in July, according to its financial results for the second quarter.
Speaking Tuesday at the Goldman Sachs Communacopia conference, Mr. Stephenson responded to critics that the company is too big and overpaid for its media activities. It is still "logical" for the company to have both a large wireless network and content, he said.

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