SANTA MONICA-On Friday, March 5, the City of Santa Monica announced that PeopleConnect, Inc., the owner of the social networking site Classmates.com, will pay up to $550,000 to settle a consumer protection lawsuit filed by the California Automatic Renewal Task Force.
The lawsuit alleges that the company charged customers for automatic renewal without their express consent. California law requires that online businesses must conspicuously disclose all automatic renewal charges and get the affirmative consent of those recurring charges from the consumer before they are charged. Companies are also required to provide an acknowledgment of those terms, as well as provide a way for consumers to easily cancel online.
“This case serves as another reminder that companies are required by law to disclose automatic subscription renewals. We will enforce consumer laws designed to protect individuals from unscrupulous businesses trying to take their money,” Los Angeles County District Attorney Gascón said. “Our consumer protection team will continue to work with other agencies to ensure companies comply with these crucial federal and state laws.”
It is further alleged that the company’s post-payment acknowledgment failed to supply a toll-free telephone number or email address for cancelation.
The company will pay $400,000 in civil penalties and costs, and up to $150,000 in restitution to customers whose payments were automatically renewed without their consent.
“The company cooperated with the investigation and is in the process of changing its website to comply with California’s auto-renewal requirements,” Public Information Coordinator Miranda Iglesias said in an official statement. “It will display its automatic renewal terms more clearly and obtain the consumer’s consent by requiring the consumer to affirmatively check a separate checkbox or similar mechanism before charging the consumer any automatic renewal or continuous service.”
This case was conducted by CART, which was formed in 2015 by the Los Angeles County District Attorney’s Office to address complaints against online automatic renewal subscriptions. CART members include the District Attorneys of Los Angeles, Santa Clara, San Diego, Santa Barbara, and Santa Cruz counties and the Santa Monica City Attorney’s Office.