January 18, 2018

automatic-renewal-lawsuit
Automatic Renewal Lawsuit

On January 8, 2018, eHarmony, Inc. (“eHarmony”), one of the largest online dating services in the United States, agreed to settle an automatic renewal lawsuit brought by the District Attorneys of four California Counties, as well as the City of Santa Monica (collectively “the State”). The final judgment was entered by the Superior Court for the State of California for the County of Santa Cruz.  The automatic renewal lawsuit brought by the State alleged that eHarmony violated certain consumer protection laws namely, California’s Business and Professions Code and the Restore Online Shoppers Confidence Act.

How Did eHarmony Allegedly Violate the Law?

Automatic Renewal Charges

Automatic renewal charges for paid subscription services and/or “free trials” that convert into automatic payments are now common in the online retail space.  As a result, automatic renewal lawsuits are on the rise.  In the instant automatic renewal lawsuit, the State alleged that eHarmony failed to clearly and conspicuously inform consumers of its auto-renewal subscription program, which led to recurring billing without consumers providing their informed consent to incur such program charges.  In addition, the State alleged that eHarmony failed to provide customers with a copy of the program terms (which outlines the automatic renewal service), and failed to disclose the customer’s right to cancel the subject subscription program.

The Settlement

As part of the automatic renewal lawsuit settlement agreement, eHarmony agreed to: (1) pay up to $1 million in restitution to California State customers whose subscriptions renewed automatically and were denied refunds when requested; and (2) pay the State $1.28 million in penalties.  In addition, the settlement terms require:

  • eHarmony to clearly and conspicuously disclose automatic renewal terms;
  • eHarmony to obtain express consent from consumers through a check-box, signature, or other similar mechanism that consumers must affirmatively select to accept the automatic renewal offer terms;
  • that the automatic renewal terms be in visual proximity to the express consent mechanism;
  • eHarmony to send consumers an email summary of the automatic renewal terms after registration;
  • eHarmony to allow consumers to cancel their orders in a simple manner, such as via email; and
  • eHarmony to clearly and conspicuously on the face of its contract, and in close proximity to customers’ signatures, include its cancellation terms.

Best Practices to Avoid an Automatic Renewal Lawsuit

If your business has, or plans to offer, an automatic renewal subscription plan, the terms must be clear to customers prior to sign-up so that you can obtain express customer consent to incur subscription fees, indicating affirmative opt-in to the automatic renewal program.  If you are interested in learning about this topic or need to review your current subscription program practices or disclosures, please email us at info@kleinmoynihan.com, or call us at (212) 246-0900.

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