SANTA MONICA—The Los Angeles County District Attorney’s Office announced on Tuesday, February 25, that Box.com, a cloud-storage provider was ordered to pay up to $274,000 in fines and fees, and restitution in a civil law enforcement case.
The judgment also orders Box.com to pay $24,000 for costs incurred during the investigation. The funds will be evenly distributed among the prosecutors’ offices that brought the case to a close. Box.com was also ordered to pay $34,000 to the Consumer Protection Prosecution Trust Fund.
The decision was made after with the Redwood City company at a Santa Barbara County Superior Courtroom last week, which forced Box.com to pay over $216,000 in penalties and provide full transparency with consumers about automatically renewing their cloud-storage accounts. The company now must:
-Clearly and conspicuously disclose the renewal terms;
-Get consumers’ consent, through a separate check-box (or similar mechanism) that does
not include other terms and conditions;
-Send a clear summary of the renewal terms after consumers pay; and
Allow consumers to cancel easily.
Online “subscriptions” and other automatically recurring charges often come after “free trials,” where consumers need to cancel in time to avoid the charges.
Federal and state law requires businesses to make these auto-renewals clear to consumers and to get their “express, affirmative consent” – before they collect any money.
The California Auto-Renewal Task Force (CART) investigates businesses to check for violations of the California and federal statutes regulating auto-renewal contracts. Members of CART also include the district attorneys of San Diego, Santa Clara, and Santa Cruz counties.
A local task force of prosecutors, which includes the Los Angeles County District Attorney’s Office, worked the case, managed by the Santa Monica City Attorney and Santa Barbara County District Attorney’s Offices. The investigative work found that Box.com Inc.’s website was automatically renewing customer payments without their prior consent or at the consumers request which is required by federal and state law.
