HelloFresh, a premier meal kit delivery service in the United States, has just settled a consumer protection lawsuit for $7.5 million. The settlement addresses claims of misleading advertising and problematic subscription cancellation policies. The Santa Clara County District Attorney's Office announced the considerable settlement after alleging that HelloFresh's practices violated California's Automatic Renewal Law and False Advertising Law.
The legal action, spearheaded by Santa Clara and Los Angeles County district attorneys' offices, along with a coalition forming the California Automatic Renewal Task Force, pointed out that HelloFresh purportedly ensnared consumers with offers of free meals, surprise gifts, and free shipping without clear disclosure. "Misleading automatic renewal subscriptions and false advertising practices don’t sell products – they sell deception," District Attorney Jeff Rosen was quoted, "Stop means stop." In addition to Santa Clara and Los Angeles, the task force includes district attorneys' offices from San Diego, Santa Barbara, and Santa Cruz counties and the Santa Monica City Attorney's Office.
A civil complaint was filed in Santa Clara County Superior Court, alleging that HelloFresh neglected to present subscription terms prior to enrolling consumers in automatically renewing product subscriptions. Furthermore, the company was accused of not securing consumers' affirmative consent, failing to provide the obligatory post-purchase acknowledgement, and not facilitating an easy cancellation process. According to the legal documents, Santa Clara County Superior Court Judge Daniel T. Nishigaya approved the settlement last Thursday.
Out of the total $7.5 million settlement, HelloFresh is slated to pay $6.38 million in civil penalties, $120,000 to cover investigative costs, and $1 million in restitution to eligible California consumers. Eligibility comprises those consumers who were involuntarily enrolled in an automatic renewal product subscription from January 1, 2019, through today, those charged for the first shipment without consent, those who canceled their subscription post the first shipment, and those who never received a refund from HelloFresh. A third-party claims administrator will send notices and distribute the restitution proportionally to those confirmed as eligible.
The DA’s Office will receive over $1 million of the settlement amount, specifically $1,063,334 in civil penalties, that will support the ongoing enforcement of consumer protection laws. HelloFresh is expected to commit to compliance with California laws moving forward.
