Beware automatic renewal scams

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As your District Attorney, I’m committed to increasing communication and accessibility between the DA’s Office and you, the community. One way I have been doing that is through this monthly column, where I provide consumer tips on public safety matters.

As your District Attorney, I’m committed to increasing communication and accessibility between the DA’s Office and you, the community. One way I have been doing that is through this monthly column, where I provide consumer tips on public safety matters.

Many of us are enticed by introductory rates for services such as online dating sites, software products or technical services. But, just when we start taking advantage of the service, a month has gone by and the tempting rate is no longer so low. At this point, consumers should be able to make a choice about whether to opt out of the service or allow the service to continue at the higher rate.

But, that’s not always the case.

Online subscriptions and other automatically recurring charges have proliferated in the U.S. in recent years. Some renewals come after free trials, where consumers need to cancel in time to avoid 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. However, many businesses still don’t follow this law.

Consumers should know that automatically-renewing customer payments, without the consumer’s express prior consent, is against the law. These laws are in place so consumers know what they’re getting when they sign up with a company. The company needs to make it clear that transactions will renew automatically, and they should not hide that information in the fine print.

The District Attorney’s Office has a Consumer Protection Unit that works to protect people and their hard-earned money from unfair business practices like this and make sure companies are following California laws.

Here’s what businesses are supposed to do: clearly and conspicuously disclose the renewal terms; get consumers’ express consent – which should be through a separate check-box (or similar mechanism) that does not include other terms and conditions; send a clear summary of the renewal terms and cancelation policy, including how to cancel, after consumers pay; and allow consumers to cancel easily. (And if the consumer signed-up online, the consumer must be allowed to cancel online).

When businesses do not follow the law, they can be held liable for civil penalties and restitution. In September, for example, my office along with other prosecuting agencies across California settled a consumer protection case against Spark Networks USA, LLC, the parent company of niche dating sites Jdate and Christian Mingle. The Los Angeles-based company agreed to change its website and sales practices to better protect California consumers. The company agreed to pay $500,000 in civil penalties and up to $985,000 in restitution to customers whose subscriptions automatically renewed or who were denied refunds when requested.

Our office has settled similar cases in recent years including against DropBox, a file sharing site, and Active, an online event service. And we continue to look at other businesses which offer automatically-renewing products or services in order to ensure that San Diego consumers are protected.

The DA’s Consumer Protection Unit is composed of Deputy District Attorneys, Investigators and Paralegals dedicated to protecting consumers and law-abiding businesses from fraudulent or unfair business practices. To report a consumer complaint, you can call (619) 531-3507 or email consumer@sdcda.org.

District Attorney Summer Stephan has dedicated more than 28 years to serving justice and victims of crime as prosecutor. She is a national leader in fighting sex crimes and human trafficking and in creating smart and fair criminal justice solutions and restorative justice practices that treat the underlying causes of addiction and mental illness and that keep young people from being incarcerated. 

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