- Posted by Holmes Weinberg, PC
- On October 6, 2017
Beachbody, a Santa Monica fitness brand behind popular exercise regimens, exercise videos, supplements and weight-loss programs, agreed to pay $3.6 million in penalties and restitution and to change its sales practices. The settlement came after an investigation found Beachbody was applying recurring charges for subscription renewals, sometimes after so-called free trials, without proper consent.
Under a judgment that came down October 2nd in Santa Monica Superior Court, Beachbody will have to disclose renewal terms and provide a checkbox for customers’ consent. It must also provide easy cancellations and send reminders of upcoming renewals.
Local governments in California play an increasing role in challenging misleading advertising practices because consumer protection laws in California are not only enforced by the Attorney General, but also by local law enforcement officials. The laws in California can be enforced under certain circumstances by a district attorney or a county counsel or even, in some cases, by some city attorneys.
In this case, the city attorney for Santa Monica determined that Beachbody was automatically charging customer credit cards for renewals of products and services without properly obtaining customers’ express consent.
Beachbody has agreed to alter its auto-renewal practices on its website and in its advertising and marketing with respect to disclosure, affirmative consent, acknowledgment, and cancellation. It agreed to make clear and conspicuous disclosures about the offer and the subsequent recurring charges and costs. Most importantly, it agreed to obtain a consumer’s affirmative consent to its auto-renewal or continuous service plans by having a separate “check-box” or similar mechanism that only relates to that consent. In addition, Beachbody agreed to send at least one post-payment acknowledgment of the transaction to consumers that includes a summary of the renewal terms. For all renewal periods of six months or more Beachbody also agreed that it would send written notices to consumers advising of the upcoming automatic renewal and explaining how to cancel. Finally, Beachbody agreed to provide at least two “easy and simple” mechanisms for cancelation, both online and by toll-free telephone.
Take away: This is the first regulatory action in California to require a separate check-box for consumers to affirmatively consent to enroll in an auto-renewal program. This second affirmative consent requirement has already been required by the FTC and other states in other enforcement actions against marketers who failed to provide the sufficient notice required to obtain “informed” express consent from a consumer. Failure to take this as a warning is to put any auto-renewal program at risk.