Guthy-Renker LLC, one of the world’s largest direct marketing companies, and distributor of Proactiv and Wen products, has agreed to change its auto-renew practices as part of a settlement negotiated with a task force of local California prosecutors' offices, approved as part of a final court judgment. The company also will pay $1.2 million in penalties and up to $7.3 million in restitution to customers who got automatically-renewed charges without their consent.
The judgment requires Guthy-Renker to:
- Conspicuously disclose automatic-renewal terms;
- Get consumers’ explicit consent for renewals, through a separate check-box solely for the auto-renew terms;
- Send consumers a clear summary of the auto-renewal terms after they pay; and
- Allow consumers to easily cancel the subscriptions, i.e. by a method "as simple as the mechanism [they] used to initiate the charge(s)."
The press release issued by the City of Santa Monica about the judgment notes other recent judgments and settlements local California prosecutors have obtained against companies for their auto-renewal practices:
- a $1.5 million settlement against Spark Networks, the parent company of dating websites JDate and Christian Mingle.
- a $2.2 million judgment against eHarmony, one of the nation’s most popular dating websites, for violating the automatic-renewal laws.
- a $3.6 million settlement with Beachbody, one of the largest sellers of exercise videos, supplements, and weight-loss programs. That settlement included the first injunction in California to require the separate check-box to ensure that consumers knowingly consent before they are enrolled in auto-renewals.
And these are just the actions brought by California prosecutors! There are a number of expensive class action settlements as well. So, all those posts on this blog about auto-renew statutes and cases? Read 'em! (Start with this link and follow the embedded ones there to read about others.) And make sure you're taking steps to ensure that the process for consumers to sign up to receive products on an ongoing basis is clear and simple and requires their express affirmative consent.
“Automatic renewal is one of the critical areas in consumer protection today,” said Santa Monica Chief Deputy City Attorney Adam Radinsky, head of the Consumer Protection Division. “Consumers always have the right to know where their money is going.”