The U.S. state of New York on Wednesday sued broadcasting and radio company SiriusXM (NASDAQ:SIRI) for allegedly trapping consumers in unwanted subscriptions and for making cancellation processes lengthy and difficult.
Shares of SIRI earlier closed -4% at $5.23, amid a broader market that slumped more than 1%.
An investigation by the state found that SiriusXM (SIRI) agents intentionally draw out interactions with consumers when they connect or call to cancel a subscription.
“Consumers should be able to cancel a subscription they no longer use or need without any issues, and companies have a legal duty to make their cancellation process easy,” New York Attorney General Letitia James said in a statement.
According to SiriusXM’s (SIRI) website, the company has about 34M subscribers. Of those, nearly 2M are New Yorkers.
“The … investigation found that the company trains its agents to keep customers on the phone or in the chat for a lengthy six-part conversation that includes asking a series of questions and then pitching the subscriber as many as five retention offers, all to delay cancellation,” the state said.
“When customers decline the offers, agents are trained not to take ‘no’ for an answer and to keep bombarding customers with questions or offers until they either relent or become frustrated,” the state added.
Through its lawsuit, Attorney General James is seeking restitution, penalties, and disgorgement from SiriusXM (SIRI) for violating New York’s business laws.