In a lawsuit against the telecom giant AT&T, investors claim that the company made fake accounts for DirecTV Now streaming service to manipulate subscriber numbers.
When did the manipulation take place?
According to the investors, the company falsely boosted its subscriber count right before it merged with Time Warner Inc. last year. It asked employees to add the streaming service to existing customers’ account without informing them. The amended complaint filed on Friday said that the company taught its employees how to add these accounts secretly. The complaint was initially filed in April 2019 with the Manhattan federal court by a group of investors, including the Steamfitters Local 449 Pension Plan.
Employees reportedly told customers that they were scrapping a $35 fee that they had to pay for mobile phone upgrades. However, in reality, the customers were charged that fee. Not only this, the employees created three fraudulent accounts with that money. The lawsuit suggests that the company was trying to mislead shareholders with false accounts when in reality, users were leaving the subscription service.
However, AT&T said that it would “fight” the “baseless claims.”
Investors open out about the fraud
According to the investors, the company’s sudden success with DirecTV subscribers was a mirage. They said, “Information provided by multiple former employees of AT&T and its affiliates from across the country collectively confirm a wide-ranging fraud, perpetrated at the highest levels of the company.”
The latest class action lawsuit has been filed by Labaton Sucharow LLP and Pomerantz LLP jointly as a class action lawsuit. The amended complaint was filed with the US District Court for the Southern District of New York. The suit not only alleges wrongdoings on the part of the company and its executives but also suggests that DirecTV Now never really took off. The service was undependable and had several technical issues, and AT&T was only “marginally” interested in that service.
The complaint also alleged that the company was making a misguided step to compete with subscription-based content providers. Its services were available at such a low price that it would be impossible for the company to generate any “meaningful revenue” out of it. The lawsuit also alleged that the high-pressure sales tactics of the company didn’t provide an answer to its low-subscriber numbers. Some customers were lured in via promotions, but they also stopped using the service when the discounts ended. Some of them never even used the service.