The complaint, filed with the Santa Clara, Santa Cruz, San Diego, and Los Angeles County District Attorney’s Offices, and the Santa Monica City Attorney’s Office, all members of CART, alleges that Savage X Fenty did not obtain the proper consent or give adequate notices for the automatically renewing charges associated with its VIP memberships, falsely advertised the ability to use store credit, and misled consumers as to the price of its products.
We have previously written about California’s novel automatic renewal and online cancellation laws and this group of District Attorneys who seek to enforce these laws on national retailers. Here, CART alleges that the company advertised products at a reduced price without clearly and conspicuously disclosing to consumers that they must enroll in the company’s automatically renewing VIP membership program in order to gain access to those prices. Further, with respect to the automatic renewal plan, the complaint alleges that the company failed to (i) clearly and conspicuously disclose the terms of the plan in visual proximity to the request for consent to the terms of plan, (ii) obtain affirmative and express informed consent prior to obtaining the consumer’s billing information, (iii) provide a post-payment acknowledgement, and (i) provide a simple online cancellation mechanism.
As part of the settlement, the company agreed to pay $50,000 in investigative costs, $1,000,000 in civil penalties, and $150,000 in restitution. In addition, the company agreed to make automatic renewal contracts in compliance with California law, and to not make “any materially false or misleading representations on its websites, advertising, emails or any other form of marketing.”
Takeaway: This recent enforcement action brought by CART against the high profile brand serves as a reminder to companies engaging in subscription programs that failure to comply with the expanding list of state automatic renewal laws may result in unwanted attention from state regulators. In particular, California regulators and plaintiffs’ attorneys continue to focus on affirmative consent requirements and the availability of online cancellation mechanisms in automatically renewing contracts. These laws are increasingly complex and require ongoing reexamination of enrollment and cancellation practices.
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