Source : Perth Now news
The consumer watchdog has its sights set on “predatory” free trial offerings across the economy after a winning lawsuit against dating site eHarmony.
Speaking to NewsWire, Australian Competition and Consumer Commission chair Gina Cass-Gottlieb said she would never put her card details into any service or product offering a free trial.
“It is predatory. Why am I being asked to put all these details in, including a credit card number?” she said.
“I actually now don’t take free trials. If I’ve made a decision to take a service, I go in, look at the terms and conditions, and just take it, but I don’t want to just do a free trial.”
In light of the eHarmony lawsuit, a key issue for the ACCC to address is automatic renewals buried in the terms and condition of products advertised as one-off purchases or free trials.
The ACCC successfully sued eHarmony this year over customers being deceived on the cost and duration of memberships.
Ms Cass-Gottlieb would not be drawn on how much the watchdog would ask the courts to fine eHarmony, or the compensation total it would call for, except that it needed to be above “the cost of doing business”.
While the watchdog waits for the courts to rule on successful lawsuits against eHarmony and Coles, the ACCC will turn its attention to the “site-wide” discount offerings of Black Friday and Christmas sales.
“Highly misleading and frankly unfair” limited stock and time warnings were also in the crosshairs, she said.
“When people are under pressure, when their (hip) pocket is really compressed, they have budget problems – You get put under pressure and they spend more than they can afford to.” Ms Cass-Gottlieb said.
She pointed out many of the Australians who filed complaints against eHarmony were lonely and looking for love.
The ACCC boss drew comparisons between Optus unlawfully selling phones and contracts to people in remote Queensland and the Northern Territory and eHarmony’s subscriptions that trapped lonely people, some going through a divorce or separation.
“We got hundreds of complaints from people. Love, romance, it’s not the sort of time when you’re going to be looking for the fine print on the app,” Ms Cass-Gottlieb said.
“We think thousands of members were likely to have been affected in the time period.”
The ACCC boss wanted the public to know eHarmony was sued after hundreds of complaints were lodged.
“We do take very seriously the concerns that are raised with us, and when we have a spike, and this was hundreds of them, we look, we investigate,” she said.
eHarmony’s loss in court should send “a very clear warning” to the subscription-based businesses in every corner of the Australian economy, a legal expert says.
Nationwide law firm Justice Network says the implications of the case will be far reaching.
“We’re going to see considerably more scrutiny of the entire subscription economy,” Justice Network director Hayder Shkara told NewsWire.
“Any business using automatic renewals, free trials that convert to paid subscriptions, difficult cancellation processes or important terms buried in the sign-up process should be reviewing those practices now.
“Subscription models are everywhere and we barely own anything anymore – streaming services, dating apps, software, fitness, food, cleaning products – you name it and someone is selling it as a subscription.”
The Justice Network firm operates across legal disciplines.
“The legal problem isn’t automatic renewal itself but when cancelling is deliberately made difficult,” Mr Shakra said.
“The eHarmony case is particularly significant because it gives businesses a very clear warning: You can’t bury an automatic renewal in fine print and then rely on the contract.”
The dating site ran afoul of the ACCC, and the courts, by making it seem like premium subscriptions could be had for six, 12 or 24 months when the subscriptions automatically renewed for 12 months at up to five times the initial cost.
Users of free eHarmony basic memberships could not talk to other singles without paying, the court found.
The company also broke consumer law by failing to specify the minimum monthly price.
During the case, the court heard from one woman using a paid account who deleted the app but was then charged $478. eHarmony referred her case to a debt collection agency.
Another customer said a surprise $598 charge, and referral to a debt collector, put a huge strain on his wellbeing.
The Federal Court is yet to decide penalties.
