Beachbody, which is one of the world’s largest sellers of exercise videos, supplements and weight loss programs, will not only pay $3.6 million as part of a final court judgment in a consumer protection case, but has also agreed to change its website and sales practices. According to a news report in the Santa Monica Daily Press, the company, which is based in Santa Monica and claims more than 23 million customers, will pay the money as penalties and restitution. The judgment was negotiated with the Santa Monica City Attorney’s Office after lengthy discussions, which followed the prosecutor’s investigation of consumer complaints.
Keeping Consumers Informed
The City Attorney’s Office learned that Beachbody was charging its customers’ credit cards on an automatic, recurring basis for renewal of products and services without securing their prior consent, which is required by law. The judgment includes a permanent injunction requiring the company to be fully transparent with consumers. Going forward, Beachbody will be required to clearly disclose renewal terms; get consumers’ consent through a separate check box; send a clear summary of renewal terms after consumers pay; allow consumers to cancel easily both online and over the phone; and send reminders of upcoming renewals for all subscriptions six months or longer.
The City Attorney’s office issued a statement saying it is committed to protecting consumers from unfair and illegal business practices. This is believed to be the first injunction in California and possibly one of the first in the nation to mandate a separate check box to get consumers’ clear consent before they are enrolled in automatic renewals.
The Problem with Auto Renewals
There are several businesses and companies that have long used auto renewals for their services and products. This practice has also been regular source of consumer complaints. The main problem is that in many cases, consumers are not given the chance to decide whether or not they want to continue paying for a service for another year. In 2006, the state of Iowa took a stand against Time Inc. saying it auto renewal policies resulting in consumers being charged for magazines they didn’t want. In that case, 22 other states joined Iowa in the suit. As a result of the action, Time agreed to change several key marketing and billing practices.
Steps You Can Take
Auto renewal is one of the critical areas in consumer protection today. As a consumer, you absolutely have the right to know where your money is going. When a company does auto renewal, they have the responsibility to inform you about it. There are steps you as a consumer can take to avoid getting scammed.
Make sure you keep files on every transaction. Before you sign up for a product or service, carefully check the terms of purchase to make sure there is no automatic renewal. If there is and you don’t want to go along with it, record the date one month before it renews to be sure you have time to cancel before they charge your credit card again. If they refuse to credit your account, dispute the charge with your credit card company and report the vendor to a consumer protection agency. Contact an experienced consumer protection attorney to obtain more information about protecting your legal rights.