It was reported in today’s news that online donors to former President Trump’s campaign “unwittingly” donated on a weekly basis when they meant to donate just once. According to the New York Times, the donation website used a pre-checked box for recurring donations (and for doubled donations), with hidden disclaimers, resulting in thousands of donors giving a lot more money to the campaign than they intended or could afford. The campaign and the Republican National Committee received thousands of complaints and wound up issuing more than 530,000 refunds worth more than $64 million. (As this blog previously reported, Trump's fundraising site also made some very interesting claims about matching donations.)
As anyone who has been following this blog knows, both ROSCA, the federal law, and a myriad of state auto-renewal laws, prohibit companies from charging their customers’ credit cards on an recurring automatic basis unless they’ve received the customer’s affirmative express consent to do so. That means no hidden disclosures and no pre-checked boxes. Whether or not these statutes will apply to Trump’s fundraising practices remains to be seen, but if they do, this will be at least one more potential enforcement action to add to the ever-mounting list against or involving the former president.
Meanwhile, back in the commercial realm, enforcement activity involving auto-renew programs continues apace. California district attorneys, which had previously brought a series of enforcement actions against a variety of companies (including Guthy-Renker and eHarmony, among others) in connection with their auto-renew practices, have been continuing to enforce in this area, with new settlements announced requiring monetary fines and restitution ranging from half a million to a million dollars. Enforcers in NY and DC have also brought actions. One, as we recently reported, recently settled, requiring the company, a sport club operator, to pay $250,000 in restitution.)
The settlements not only impose monetary penalties and relief, but in some cases require the companies to take steps in their auto-renew programs that go beyond the already stringent requirements of the governing statutes. For example, one settlement agreement requires the company (Relish Labs dba Home Chef) to obtain consumers’ agreement to the auto-renew terms separately from their agreement to complete the purchase.
These enforcement actions, along with pending class actions where even technical non-compliance with statutory requirements got cases beyond the pleading stage, underscore the importance of using auto-renew features with great care: clear, conspicuous and fulsome disclosures; an appropriate mechanism for obtaining real affirmative consent; and an easy cancellation process.
(Description of graphic for visually-impaired readers: drawing of a $100 bill with Donald Trump's face in the center.)