Dish Network must pay the Colorado Attorney General $2 million over what the state authority said were misrepresentations about the company’s pricing.

According to AG John W. Suthers, Dish removed a provision from sales scripts in 2010 stating that the company reserved the right to increase the prices of its monthly programming packages. Consumers believed that their prices were “locked in,” “frozen,” or “guaranteed” for an initial two-year contract period, the AG said.

But in reality, customers were subject to price fluctuations about which they were notified only after they agreed to their contracts. Making matters worse, Dish “buried” the notice in an e-mail message that was filled with other information, leaving most consumers surprised and confused when their monthly bills were increased, the AG alleged. The numerous consumer complaints to the AG’s office triggered an investigation and the lawsuit.

While reviewing transcripts of Dish sales calls, investigators uncovered misleading promises from sales representatives that consumers were “safe” from price increases because they were under contract, that the monthly fee was a “set price” as long as the consumer didn’t change their programming, and that the “prices are guaranteed during that twenty-four-month agreement.”

However, Dish increased its prices on an annual basis by an average of $5, the AG said.

To settle charges that Dish violated the state’s false advertising and consumer protection laws, it agreed to pay a fine of $2 million and to revise its sales disclosures. Going forward, the company will include a statement that Dish reserves the right to raise its prices at any time. The company did not admit liability in the consent judgment.

To read the complaint and consent judgment in Colorado v. Dish Network, click here.

Why it matters: Allegedly deceptive pricing raises red flags for regulators, particularly state AGs. The same week Dish reached its deal in Colorado, Massachusetts Attorney General Martha Coakley settled charges that a retail electricity supplier engaged in deceptive marketing by luring customers into signing contracts with low introductory rates and then jacking up costs. The company agreed to pay $4 million, almost all of which constitutes consumer restitution.