Mixed Signals: How Retailers Mislead Consumers on the Digital Television (DTV) Transition

02-14-2008

Executive Summary

For many Americans who are hearing about the transition for the first time, information about the change comes from electronic store retailers, where consumers ask what is necessary to maintain TV reception – a primary source for news, information and entertainment.

In an effort to determine America’s preparedness for the transition, the U.S. Public Interest Research Group (PIRG) Education Fund conducted a “secret shopper” survey at 132 locations of five leading national electronics retailers in ten states.

The survey found that retail electronic store staff are largely uninformed and are not adequately preparing consumers for the impending transition to digital television.

Our survey shows that the majority of retailers provide inaccurate or misleading information about the digital transition. Many sales clerks tried to persuade our surveyors to buy new, expensive digital televisions or high-definition televisions rather than explaining the availability of the less expensive option, such as buying converter boxes, discounted by government coupons available to anyone who needs one.

Specifically, staff at these 132 locations provided the following inaccurate or misleading information about the digital transition.

• 81% of the sales staff did not know about or gave out inaccurate information about converter boxes.

• 78% of the sales staff provided inaccurate information about the federal government’s coupon program for converter boxes.

• 42% of sales staff provided inaccurate information about the month of the digital transition deadline date.

To protect consumers against misinformation or consumer fraud, the U.S. PIRG Education Fund makes the following recommendations. Retailers must ensure:

• they adequately educate staff about converter boxes and the coupon program.

• converter boxes are made available at fair prices.

• consumers are informed of the availability of federal coupons.

• analog TV sets remaining on store shelves are properly labeled.

Additionally, the federal government must enforce penalties against companies that mislead consumers in an effort to reap greater profits from the sale of TVs to people who could get by with a low cost converter box, with its price reduced further by a $40 government coupon.

The congressionally mandated transition to a digital system gave broadcasters one of the largest public giveaways in the history of our nation. The value of the publicly owned airwaves used by broadcasters increased by billions of dollars, for which broadcasters paid nothing.

The public lost out to powerful broadcasters when the decision to switch systems was made. Now, one year from the switch date, it looks like consumers are in danger of losing out again by unknowingly being steered toward the purchase of unnecessary, expensive equipment by uninformed or dishonest sales clerks.