DirecTV Inc. said that it has settled a consumer protection dispute with state attorneys general in 50 states concerning how it deals with satellite TV customers over cancellation fees and other terms. But a local consumer group said the deal won’t stop it from proceeding with a class action suit against the company.

The El Segundo company, which is the nation’s largest satellite TV provider, announced late Tuesday that it would pay $14.25 million to the states to cover legal and investigation costs and fund consumer protection programs. DirecTV has more than 18 million subscribers nationwide with more than one million in California.

Pertaining to its notification policies, DirecTV said it would make it clear to customers that they must pay a $20-per-month fee for any time remaining on a 24-month contract if they cancel. It also will follow a specific policy on informing consumers about fees they must pay if they don’t return leased equipment, and agreed to a dispute process that could lead to arbitration if consumers complain about issues that have not yet been resolved.

Late Wednesday, Santa Monica consumer group Consumer Watchdog said it will proceed with its 2008 class action lawsuit against DirecTV, and criticized the settlement as being negotiated “in secret” and too lenient on the company.

“The claims process proposed by the settlement is confusing and vague and gives DirecTV far too much control over how consumers’ claims for refunds of illegal overcharges and other improper actions are resolved,” the group said.

DirecTV has not commented on the Consumer Watchdog’s announcement, but said earlier that the settlement was the result of long negotiations with the state prosecutors. The company “has worked hand-in-hand with the attorneys general to formalize many of the customer improvements we have made over the past few years and are pleased to have come to this agreement,” Chief Executive Mike White said in a statement.

California’s outgoing attorney general, Jerry Brown, said his office is reviewing 1,136 complaints it has received about the company to determine which customers are entitled to restitution. “DirecTV won customers by offering special deals with hidden costs, and also extended customers’ contracts without telling them,” Brown said in a statement. “With this settlement, DirecTV will reimburse customers and change its sales and advertising practices to comply with the law.”

DirecTV shares closed down 60 cents, or 1.5 percent, to $39.65 on the Nasdaq.