AT&T was recently charged with a lawsuit that suggests the company created fake customer accounts to make it look like DirecTV Now was seeing customer growth. This move came ahead of the company’s merger with Time Warner.
The lawsuit seeks class-action status and alleges AT&T encouraged its employees to add the service to customers’ accounts without their knowledge.
The amended complaint was filed on Friday in the US District Court for the Southern District of New York and is brought up on behalf of anyone who holds an AT&T stock ahead of the Time Warner merger amounting up to $85 billion.
The lawsuit suggests that a variety of tactics were used to promote the idea that DirecTV was growing organically. The employees of AT&T were taught how to convert activation fees that customers typically had to pay to upgrade their phones into DirecTV Now subscriptions. The involved customers were told the fee was being waived off, but they were charged anyway, and the payment was applied using fake emails.
A former employee of AT&T said that around 40%-50% of customers that he dealt with in 2017 were complaining about being charged for DirecTV Now, without signing up for a subscription. This claim from a former employee was supported by other employees and eventually became a directive that came from the upper management to the sales channel, according to the lawsuit.
In late 2018, AT&T finally disclosed that none of the 500,000 subscribers had remained on DirecTV Now service. These subscribers were heavily discounted, and the subscriptions were dropped rapidly down to 267,000. There was another report in April 2019, saying that another 83,000 subscribers had disconnected from DirecTV Now, and in July, more 168,000 people had abandoned it.
AT&T’s spokesperson said in a statement that these claims are baseless and the company is ready to fight them.
“By buying AT&T’s securities at these artificially inflated and artificially maintained prices, the Class members suffered economic losses, which losses were a direct and proximate result of Defendants’ fraudulent conduct,” the lawsuit states.
In addition to this, the CEO of Communications at AT&T, John Donovan, recently announced his retirement, with WarnerMedia CEO John Stankey being promoted to president and CEO at AT&T.