To end an action filed by a California city attorney and several district attorneys who challenged its automatic renewal practices, eHarmony agreed to pay up to $2.2 million in penalties and restitution.
The Santa Monica city attorney and the district attorneys from Napa, Santa Clara, Santa Cruz and Shasta counties alleged that the dating site violated state consumer protection laws by failing to clearly and conspicuously explain that the subscription fee would be automatically charged unless canceled, that it neglected to provide users with their dating contract and that it did not explain customers’ right to cancel their automatic renewal plans.
To settle the charges, eHarmony agreed to a host of injunctive relief measures. Generally, the company is prohibited from making any false or misleading representations intended to promote sales on its website or other advertising and marketing media, and from failing to abide by all applicable laws relating to contract cancellations.
More specifically, the company must present its automatic renewal offer terms in a “clear and conspicuous manner” before the subscription or purchasing agreement is fulfilled and in visual proximity to the request for consent to the offer. Any applicable disclosure requirements of the federal Restore Online Shoppers Confidence Act must also be displayed.
eHarmony also promised to obtain affirmative consent from consumers prior to charging their credit or debit cards or accounts as part of the automatic renewal program, by providing a check box, signature or other substantially similar mechanism that consumers must affirmatively select or sign to accept the automatic renewal offer terms only and no other part of the transaction.
The consent must be in visual proximity to the offer terms and contain no additional information. An email confirmation of the transaction must be “immediately” provided to consumers after the contract is reached, which again states the automatic renewal terms.
With regard to cancellation of the automatic renewal program, the company must provide a toll-free telephone number, email address or postal address with a “cost-effective, timely, and easy-to-use mechanism for cancellation,” with cancellation effective within one business day of eHarmony’s receipt of the cancellation request.
In addition to making these policy changes, the company will pay civil penalties totaling $1,205,000 and $75,000 toward the government’s investigation costs.
For consumers, restitution will begin with a $250,000 payment into a fund that will be available to California consumers who paid membership fees to eHarmony between March 10, 2012, and Dec. 13, 2016, who either previously requested cancellation and had the request denied or were charged for at least one automatically renewed cycle without their knowledge and consent.
If the initial deposit is insufficient to satisfy the restitution obligation, the company is on the hook for as much as is necessary to cover the deficit, up to a total of $1 million. If the total claims exceed that amount, then all claims will be reduced on a pro rata basis. Each eligible recipient will receive a cash restitution payment of $29.95 or, if the recipient remains a member of eHarmony, either a $29.95 account credit or the greater of $29.95 or one month’s free service at the same plan and service level of the recipient’s existing service.
To read the final judgment and injunction in California v. eHarmony, Inc., click here.
Why it matters: The significant monetary settlement and policy changes facing eHarmony provide an important reminder to companies using automatic renewal programs to ensure they comply with both state and federal laws in order to avoid a similar action.