Hellofresh agreed to pay $ 7.5 million to resolve a demand for consumer protection filed by Santa Clara County.
The lawsuit, filed at the Superior County Court of Santa Clara, claimed that the food kits company had cheated customers and made it difficult to cancel their subscriptions.
As part of the agreement, which was approved last week, Hellofresh will pay $ 6.38 million in civil fines, $ 120,000 in research costs and $ 1 million in restitution to California consumers.
“Automatic renewal subscriptions and false advertising practices do not sell products: they sell deception,” said Santa Clara County. Atty Jeff Rosen in a Monday press release on the agreement. “Stop it means stop.”
California consumers eligible for payment must have registered in the subscription of Hellofresh automatic renewal products between January 1, 2019 and August 18, 2025, and charged by the first shipment without their knowledge. They must also have canceled their subscription after that shipment and did not receive a Hellofresh refund.
Hellofresh denied irregularities.
“We take our commitment to customer transparency very seriously, and our subscription model and cancellation policies have been consistently clear for customers throughout the customer's trip,” said Hellofresh spokesman Abby Dreher, in an email. “While we denied any irregularity, we have fully cooperated with the Coalition of District Prosecutors of California and we have concluded a conciliation agreement with them to resolve the matter in a friendly way.”
The Santa Clara County District Prosecutor's Office directed the case together with the Los Angeles County District Prosecutor's Office, as well as other members of the “Automatic Renewal Task Force” of the State, which also includes the offices of the San Diego, Santa Barbara District Prosecutor and the County of Santa Cruz, as well as the lawyer of the city of Santa Monica.
The company registered customers in subscriptions with automatic renewal, but did not clearly reveal those terms or offered a simple way to cancel the subscription, said the Santa Clara County District Prosecutor's Office.
The Santa Clara County District Prosecutor's Office also said that the company had not been able to provide free food terms and conditions, bonus gifts and free shipping offers, actions that are violations of state laws that govern automatic renewal and false advertising.
Millions of consumers pay for services or goods without their consent, and regulators at the federal level have tried to establish rules that avoid this practice, but with little success.
Although the Federal Commerce Commission last year ended a “click to cancel” rule that requires that it is so easy to cancel a recurring subscription as to register in one, a Court of Appeals of the judges appointed by Republicans expelled the rule last month after the business groups presented a legal challenge. The failure in court occurred less than a week before the law entered into force and after years of regulatory work to resolve the details.
