One such lawsuit has been filed by a consumer in California against a vendor of feminine hygiene products. The plaintiff has brought her Automatic Renewal Program Lawsuit as Jane Doe in US District Court for the Central District of California on November 13 (Case number 8:15-cv-01882-DOC-KES). She has also proposed her lawsuit as a class action.
Her story carries a familiar refrain. The plaintiff purchased a subscription plan for feminine hygiene products from the defendant, doing business as HelloFlo. According to the Auto-Renewal Subscription Program lawsuit, HelloFlo extended several offers for Auto-Renewal and made several overtures to the plaintiff and class members for continuous service without presenting all the relative terms and conditions in a clear and conspicuous manner. The plaintiff also asserts in her proposed California class action that several debits and withdrawals were made from credit and debit cards or third-party accounts without obtaining the necessary consent from the plaintiff.
That’s a big deal, given that California and other states have in recent years brought forward legislation spelling it all out for retailers and vendors according to regulations outlined in Provision 17600 of the California Business & Professions Code.
Generally, businesses that employ automatic subscriptions are required, in no uncertain terms, to disclose both the terms of the subscription service as well as any cancellation policy in a clear and conspicuous manner before the consumer purchases the items or services.
“Clear and conspicuous” is the operative term, and in sum suggests that businesses, vendors and service providers must ensure such terms are obvious to the consumer and not glossed over. For example, any vendor that fails to disclose the terms at purchase but nonetheless points the consumer to a link that contains terms of service and cancellation policies is not viewed as having disclosed the terms in a clear and conspicuous manner.
Even consumers who have been apprised of terms of service and cancellation policies prior to checkout but who were not invited by the vendor to verify that they clearly understood what they were agreeing to, would have recourse to act against the vendor with an Auto-Renewal Lawsuit according to state laws observed in California.
Automatic renewals, as most know, grew from the advent of free trials. Once the free trial period ended, the service would stop unless the consumer, by a certain date, opted in to the service formally in order to keep it going. Either out of convenience to the consumer or hoping to catch them asleep at the switch, vendors and service providers increasingly have moved to the “opt-out” model, where service extends automatically beyond the free trial window and charges kick in automatically unless the consumers opts out. Thus, the onus is on the consumer.
With so many consumers multitasking as an everyday habit, these kinds of deadlines often get missed, with many a consumer clueing in only after noting a charge to their credit card. By then, it’s too late: the vendor already has payment for a month or a year’s worth of unwanted service by the time the consumer opts out. Even missing the opt-out window by just a couple of days can incur charges.
Some consumers dealing with automatic renewals have found that sending a request to opt out to the person or department having extended the offer of a free trial in the first place - and so doing well within the deadline - can still incur charges. That’s because promotion and marketing departments conveniently have no authority to facilitate the opt-out. The request to opt out is only processed in a timely manner if it goes to the proper department. Also - conveniently - such requests more often than not don’t get passed along.
Too many consumers, busy as they are, will not notice at all, notice too late, or make a mental note to stop the service at their earliest opportunity but pay the bill in the meantime. Some consumers stuck with a charge of even a few dollars will be hounded for months by the service provider for payment, long after an opt-out request has been honored.
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In so doing, the defendant failed to obtain the consumers informed consent. Automatic renewals are everywhere - from fitness club memberships, to magazine subscriptions, entertainment packages, and even antivirus subscriptions for computers. Most begin with an attractive offer of a free trial.
It’s important for consumers to know that the onus is on the retailer or service provider to ensure, beyond all reasonable doubt, that as a consumer you fully understand that to which you are agreeing. If not, laws are specific and are on your side.