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Class Actions Fight Back Against Deceptive Automatic Renewal Practices  

In the age of the internet, online delivery of goods or services has paved the way to immeasurable convenience. Almost anything can be ordered online and accessed immediately or delivered to your doorstep.  However, online shopping also opened the door to numerous and creative ways to harm consumers.  One of those is deceptive automatic renewals.

At first blush, the idea of an automatic renewal appears welcoming.  For instance, if a consumer requires a certain personal care item on a monthly basis, the ability to purchase that item from an online drugstore is a great idea.  Having the item shipped monthly, without the hassle of going online and pulling out one’s credit card over and over, is an even better idea.  It’s a convenient and easy way to shop.  But what if, for example, the company decides to enroll the you in an automatic renewal service without your express consent?  Therein lies the risk for the online shopper to fall victim to consumer fraud.

At least 22 states have enacted statutes regulating deceptive automatic renewals.  These statutes run the gamut from California, Connecticut, Illinois and Oregon, which have particularly stringent statutes covering most products and services, to Georgia and Florida, where the statutes only cover service contracts, to North Carolina and Louisiana, where the focus is on disclosure and penalties.  Of highly limited help for consumers are statutes enacted in Maryland, New Hampshire and South Carolina, which focus only on health club memberships; Rhode Island, applying to personal property leases; New York and Utah, dealing with service contracts for the repair of real and personal property, Tennessee, which only addresses alarm services and buyers clubs; and South Dakota, where the focus is on telecommunications contracts.

In the past few years, class action suits have been on the rise to protect consumers against unauthorized, hidden, or deceptive automatic renewals.  In 2014, Sirius XM Radio announced its settlement of $3.4 million with consumers in 45 states and the District of Columbia.  Class Action lawsuits have been filed against music-streaming giant Spotify, video-streamer Hulu, and cloud storage provider Dropbox.  Class action allegations of injury stemming from unlawful automatic renewal policies have also been brought against LifeLock Inc., the seller of identity theft services; Symantec (the creator of Norton Antivirus Software); the American Automobile Association (AAA); PayPal; and many other companies across numerous industries.

A consumer should look for the following when shopping online:

  • Clear and Conspicuous Automatic Renewal Disclosure;
  • The option to affirmatively consent (opt-in to the automatic renewal rather than opt-out);
  • Notice of the Terms of the Automatic Renewal and Cancellation Terms; and,
  • Terms of Service related to Material Changes of the agreement

If you believe you may have fallen victim to an automatic renewal without you clear consent, contact us to discuss the matter. All automatic renewals are not illegal.  Forcing you into one through deceptive practices is.

About Goldman Scarlato & Penny, P.C.

Goldman Scarlato & Penny, P.C. prosecutes consumer class actions and represent consumers and business owners who purchased products that were misrepresented, defective or didn’t perform as advertised, or who were the victim of deceptive consumer practices. To learn more about Goldman Scarlato & Penny, P.C., please visit our website at www.lawgsp.com or contact Paul Scarlato, scarlato@lawgsp.com or Mark Goldman, goldman@lawgsp.com

In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent updates regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases. Also, the brokercheck report linked to some of our blogs is the up-to-date version as of the date of posting. Visitors may check the most recent version of each brokercheck report at www.finra.org.

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