DISH Network has agreed to pay $125,000 to the state of Vermont to resolve a complaint filed by the state Attorney General over a letter the company sent to subscribers that was allegedly unfair and deceptive.

In July 2010, the satellite TV provider sent letters to 310 Vermont subscribers that the replacement of their equipment was “necessary” and “free,” urging consumers to “Please read immediately to avoid service interruption” and “Urgent Action Required.”

The company also required some customers who responded to the letter to enter into a 24-month contract before they received the upgrade, the state alleged.

While the consumers who received the letter required an equipment upgrade at some point in the future to continue to receive HD channels, none needed it immediately, DISH acknowledged, and some consumers didn’t need the equipment for up to 18 months.

Under the settlement, DISH agreed to pay $125,000 and agreed to clearly and conspicuously disclose all material terms of offers and representations in advertisements, as well as comply with the Federal Trade Commission’s guidelines on using the term “free.”

Attorney General William Sorrell said that terms like “urgent” and “free” “have significant meanings” under Vermont’s Consumer Fraud Act.

“Using such language to trigger unnecessary action by Vermont consumers won’t be tolerated,” Sorrell said in a statement about the settlement.

To read the complaint in Vermont v. DISH Network, click here.

To read the settlement and consent decree, click here.

Why it matters: The settlement was DISH Network’s second with the state of Vermont in the last two years. In July 2009, the company paid Vermont $125,000 as part of a $5.9 million settlement with 45 states over charges that it violated telemarketing laws, failed to adequately disclose terms and conditions of service to consumers, didn’t tell consumers when their purchased or leased satellite equipment was previously used, and advertised prices without disclosing rebates and making price comparisons to materially different goods and services.