By Angelica C. Gualpa
HelloFresh found itself on a lower-cash diet yesterday.
That after Los Angeles County District Attorney Nathan J. Hochman’s office announced that HelloFresh—the world’s largest meal kit delivery company—had been ordered by the Court to pay $7.5 million to settle a civil lawsuit for allegedly enrolling consumers into auto-renewing subscription plans without proper disclosure or consent.
The lawsuit, jointly led by the Los Angeles County District Attorney’s Consumer Protection Division and the Santa Clara County District Attorney’s Office, alleged that the Germany-headquartered Company violated California’s Automatic Renewal Law by misleading California consumers into ongoing subscription charges without adequate notice or authorization.
“No company no matter how big or well-known is exempt from California’s consumer protection laws,” said Hochman. “We will aggressively pursue enforcement when businesses take advantage of consumers by failing to clearly disclose subscription terms, obtain proper consent, or provide a fair way to cancel. Consumers have a right to know what they’re signing up for, and they deserve better. Digital deception is still deception under the law.”
The civil complaint alleged that HelloFresh failed to:
- Clearly and conspicuously disclose its subscription terms before collecting payment;
- Obtain consumers’ affirmative consent before charging their credit or debit cards;
- Provide a post-transaction acknowledgment containing the material terms of the subscription; and
- Offer an easy-to-use mechanism for cancellation.
These practices allegedly resulted in consumers being unknowingly enrolled in ongoing payment plans that were difficult to terminate.
This case is one of the ongoing investigations conducted by the California Automatic Renewal Task Force (CART). The Los Angeles County District Attorney’s Office established CART in 2015 to address rising consumer complaints about subscription-based traps.
In addition to the Los Angeles County District Attorney’s Office, CART includes the district attorney’s offices of Santa Barbara, Santa Clara, Santa Cruz, and San Diego, and the Santa Monica City Attorney’s Office.
“I want to thank the dedicated prosecutors in our Consumer Protection Division and members of CART for their outstanding work on this case, in particular Deputy District Attorney Duke Chau,” said Hochman. “He and his team worked tirelessly with the Santa Clara County District Attorney’s Office to secure a result that holds a major corporation accountable and delivers restitution to consumers. Their commitment to fairness and justice is what makes this outcome possible.”
The HelloFresh case was filed in the Santa Clara County Superior Court. Under the final judgment, signed by Judge Daniel T. Nishigaya, HelloFresh was ordered to pay:
- $6.38 million in civil penalties, divided among the prosecuting agencies;
- $120,000 in investigative costs; and
- $1 million in restitution to be distributed to eligible California consumers.
HelloFresh occupies approximately 75 percent of the U.S. meal kit delivery market. The company did not admit liability in the settlement.
