An L.A.-based marketing company agreed to pay $8.5 million to settle a lawsuit alleging it did not tell customers of automatic renewal charges, according to the San Diego County District Attorney.
Guthy-Renker L.L.C. markets acne treatment and hair products, including brands like WEN and Proactiv.
“Companies should know that automatically renewing customer payments, without the consumer’s express prior consent, violates the law,” District Attorney Summer Stephan said.
The California Automatic Renewal Task Force brought a suit against Guthy-Renker, claiming its automatic renewal practices were misleading.
The task force is made up district attorneys from San Diego, Los Angeles, Santa Clara, and Santa Cruz counties. It also includes the Santa Monica City Attorney’s Office.
Guthy-Renker agreed to pay $7.3 million in restitution to customers whose payments were automatically renewed without their contest, the San Diego County District Attorney Office said. An additional $1.2 million in penalties will be paid.
“Companies must adequately disclose when a transaction will renew automatically and they should not hide that information where a consumer is not likely to notice it,” Stephan said.
The district attorney said under California law, online businesses must “clearly and conspicuously” reveal all automatic renewal charges. These businesses must also get “affirmative consent” for these charges.
“These laws are in place so consumers know what they’re getting when they make purchases,” Stephan said.
Guthy-Renker agreed to more clearly display its renewal policy on its website.
The settlement only affects Guthy-Renker and not other companies selling WEN or Proactiv products, the district attorney said.