eHarmony has agreed to pay up to $2.2 million in penalties and restitution to put an end to an action filed by the Santa Monica city attorney and several district attorneys that challenged its automatic renewal practices.
The plaintiffs alleged that the dating site violated state consumer protection laws by failing to clearly, conspicuously and prominently explain that the subscription fee would be automatically charged unless canceled. Plaintiffs also alleged that eHarmony failed to provide users with their dating contract and the right to cancel automatic renewal plans.
As part of the settlement, eHarmony has agreed to various injunctive relief measures, including a prohibition from making false or misleading representations and from violating applicable laws relating to contract cancellations.
The company is required to 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. The consent must be in close visual proximity to the offer terms and contain no additional information.
An email confirmation of the transaction must be provided to consumers immediately after the agreement is reached, which sets forth material terms, including, without limitation, the automatic renewal terms. The subject line of the written acknowledgment must clearly identify it as a confirmation of the transaction.
eHarmony has also agreed to obtain affirmative consent from consumers before any automatic renewal program-related charges are incurred by providing a check box, signature or other substantially similar mechanism. Consumers must affirmatively select or sign to accept the automatic renewal offer terms only. Such assent cannot be combined with any other part of the transaction.
Disclosures, as set forth by the federal Restore Online Shoppers Confidence Act must also be complied with.
The company must also 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 automatic renewal program cancellation request.
The company has agreed to pay civil penalties totaling $1,205,000 and $75,000 toward the government’s investigation costs.
Restitution will commence with a $250,000 payment into a designated fund that will be available to California consumers that paid membership fees between March 2012 and December 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. In the event that the initial deposit is not sufficient to satisfy the company’s restitution obligation, eHarmony will be obligated to cover any deficit, up to $1M. In the event that the total claims exceed that amount, all claims will be reduced, pro rata.
To read the final judgment and injunction, including the civil penalties and restitution obligations, see here.
This article should be of interest to any company or individual engaging in Internet marketing, including corporate counsel. Please contact an FTC attorney if you are interested in discussing the design and implementation of preventative compliance controls, or if you are the subject of an advertising related investigation or enforcement action.
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