XM Satellite Radio's reliance on free trial periods, rebates, and telemarketing have fallen under the scrutiny of the federal government, which is investigating whether the company complied with laws
such as a federal antispam law that regulates e-mail marketing. The probe is being conducted by the Federal Trade Commission and will reportedly focus on XM's rebate program, a tool it has used
aggressively to build its subscriber base in recent years. XM typically offers rebates of around $30 on many of its radios, whose full prices range from $80 to $400. But the deals don't always go
smoothly and have apparently generated almost 200 Better Business Bureau complaints. Most of them have concerned billing and refund practices, according to the bureau, which has assigned an
"unsatisfactory" rating to XM. "You do see with new businesses aggressive marketing practices," said Andrea Levine, director of the BBB's national advertising bureau. "Free trial periods and rebates
have been problems in lots of other industries," she said, often because consumers forget when the trial period ends or they end up paying more than they expected. XM has 6.5 million subscribers. "To
our knowledge we comply with all of the laws that are under the purview" of the FTC, said Gary Parsons, XM's chairman.
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