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The Act says AT&T created fake accounts with DirecTV Now subscription numbers



According to the lawsuit, employees – faced with aggressive sales orders – were "directed and actively encouraged" to convert $ 35 activation fees paid by customers to upgrade their phones at price for multiple DirecTV Now subscriptions. This was allegedly done by "defaulting, but still charging the customer, and applying the payment to up to three DirecTV Now accounts using fake email addresses."

The complaint claims customers were not told that they were signed up for a subscription, and that the company claims to have regular complaints from customers saying they were charged for accounts that were they didn't sign up. The complaint also details other alleged procedures for increasing subscriptions without the client's consent.

The purpose of these efforts, the indictment suits, was to create the false impression that the service was compensated by the denials of DirecTV's satellite business, and to help justify the acquisition of Time Warner company, called 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 for comment on specific allegations therein, such as of claims that the company forced its employees by setting aggressive sales targets and encouraged employees to use unrelated fees to create DirecTV Today accounts.

Plaintiff includes Local 449, a Pittsburgh-based union pension fund, and Melvin Gross, an investor who exchanged Time Warner's stock for AT&T stock as part of the acquisition.

DirecTV Today, launched by AT&T in late 201

6, has been billed as a major part of the company's entertainment pivot. The lawsuit alleges that executives, including CEO Randall Stephenson, had misled claims that the growth of DirecTV Now was stable, and that it was driven by "organic" demand and limited promotions.

But despite the alleged inflation of subscriber numbers over consumer unwillingness, the service suffered from significant turnover as customers jumped from a discounted streaming service to another, according to the complaint. attorneys spoke with a number of current or former AT&T employees who provided information on the alleged scheme. It refers to a former employee in Michigan who claims to have approximately 40% to 50% of customers he handles since early 2017 complained of being charged for DirecTV Today subscriptions saying they never signed up .

The allegations came in what for many reasons was a delicate time for the company.

Stephenson recently promoted WarnerMedia CEO John Stankey to a position that puts Stankey in order for Stephenson to succeed should he retire. (Stankey does not say in the complaint that he has personally misled investors, but the complaint does say he should acknowledge investors have been misled.)
WarnerMedia's plan to next year launch its own streaming service, HBO Max, in a crowded market at a price higher than many of its competitors, including Disney + and Netflix, is charging. And Elliott Management, a hedge fund activist with a $ 3.2 billion stake in AT&T, is demanding changes, including a possible avoidance of DirecTV.

The firm specifically called DirecTV Now in a recent letter to the AT&T board, calling the service "poorly executed" and pointing to its decreasing subscriber base.

By the end of the fourth quarter of last year, AT&T reported that DirecTV Now had 1.6 million customers. It stood at 1.3 million as of July, according to earnings reports for the second quarter.
Speaking on Tuesday at the Goldman Sachs Communacopia conference, Stephenson responded with criticism that the company is too big and paying too much for media businesses. "This makes sense" for the company that owns both a large wireless network and content, he said.

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