HelloFresh New Zealand has been fined $845,000 for misleading consumers following criminal charges laid by the Commerce Commission against the company.
The company, which operates in 18 countries and is a subsidiary of the largest meal-kit company in the world, pleaded guilty to misleading consumers into reactivating their subscriptions to the food delivery service without their express knowledge or consent.
Commerce Commission Deputy Chair Anne Callinan says the case highlights growing concerns around subscription-based services.
“This case should send a strong message to those who offer subscription-based services – you need to be transparent about your terms and ensure customers are giving informed consent when signing up to your service,” says Ms Callinan.
The Commission says HelloFresh’s call strategy was centred around cold calling former customers, framed as gathering customer feedback.
In reality, the primary purpose of these calls was an attempt to reactivate customers by offering discount vouchers without making it clear that, if accepted, could lead to the customers’ paid subscription being reactivated.
“This was a lengthy and widespread call strategy from HelloFresh where the company managed to reactivate almost 80,000 customers’ subscriptions over the course of 18 months, after attempting over one million calls to former customers.”
“We found that this misleading practice was embedded in HelloFresh’s business processes – this was not a one-off issue,” says Ms Callinan.
The Commission received a high number of complaints about the way HelloFresh was operating and this case was about fighting for those consumers against a large international company.
“After listening to a sample of call recordings, it’s clear that agents glossed over or ignored customers, who on numerous occasions clearly stated they did not want to restart their subscription. These concerns were ignored, and we think that’s unacceptable.”
“Consumers have the right to make informed choices, and that includes knowing exactly what they’re signing up for – especially when this directly impacts their wallets,” says Ms Callinan.
Buying services through subscriptions is becoming more common, and with that the risk of subscription traps is becoming a growing concern to the Commission, she said.
Addressing any misleading online sales conduct, including subscription traps is one of the Commission’s enforcement priorities, Ms Callinan said.
The Commission is encouraging anyone who thinks they have been misled by a subscription-based service to contact the Commission via its website.
