Cosmetics E-tailers At Risk Amid Trending Auto-Renewal Class Actions
This article was originally published in The Rose Sheet
Businesses must provide proper disclosures to online consumers who enroll in auto-renewal purchasing or subscription programs or risk facing litigation in California and other states, according to Tucker Ellis attorney Ronie Schmelz. Birchbox is among companies that have been targeted for alleged violations of California law designed to protect consumers from being charged for continuous product shipments or ongoing services without their express consent and ability to cancel easily.
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Products offered in online scams that lead to monthly bills usually are “something that the average person is going to be looking for, a renewal product like vitamins, tooth whitener and skin cream," says an FTC attorney. Federal judge halts sales by Triangle Media and associated companies and freezes their assets after FTC showed “immediate and irreparable injury, loss or damage” to consumers.
A proposed bill advancing through California's legislature would require businesses to present consumers with a standalone opt-in form for auto-enrollment programs that is separate from the consent mechanism for an introductory gift or offer, and then with written notice three to seven days before the first automatic payment goes through. California's rules for continuity marketing are already the toughest in the nation.
A California district court has imposed injunctions and monetary penalties on roughly 30 companies and individuals that cooperated to sell AuraVie, Dellure and LéOR Skincare offerings, among others, via deceptive “risk-free” trial plans, according to FTC. The agency says it will continue to go after negative-option billing schemes that charge consumers for recurring product shipments without their express consent.