Lawsuit alleged automatic renewal violations
OAKLAND – Alameda County District Attorney Nancy E. O’Malley announced today that her office, together with the District Attorneys of San Diego, Napa, Shasta, and Sonoma counties, settled a consumer protection action against Nakedwines.com, Inc. (Naked Wines), an online seller of wine.
The complaint, which was filed in San Diego County Superior Court, alleges that Naked Wines violated California’s Automatic Renewal Law.
The Automatic Renewal Law is an important consumer protection statute. With some businesses, consumers can continue to receive and pay for a product through “automatic pay.” However, the consumer must agree to that form of payment. In other words, if a business is going to keep billing the consumer’s credit card or other means of payment, the business is required to make certain disclosures both before and after enrolling customers in automatic renewal agreements, which automatically renews payment on a regular basis unless further action is taken.
The complaint alleges that Naked Wines violated the Automatic Renewal Law with respect to two programs:
- “Wine Angel,” a program in which consumers pay $40 per month and can use the accrued money for future purchases of select wines; and
- “Wine Genie,” a program in which customers pay on a monthly basis for automatic wine shipments.
The complaint alleges that the enrollment process for both programs failed to include the required pre-purchase disclosures, provided insufficient post-payment acknowledgments, and failed to offer a simple online mechanism for consumers to stop recurring charges.
“My office is committed to and continues to take all measures to protect consumers from businesses that fail to follow the law. In this case, we are enforcing the California Automatic Renewal Law, which has proven to be an important protection and benefit to Californians,” said DA O’Malley. “Consumers should always receive the required disclosures before and after agreeing to any contract that may result in months or years of recurring charges.”
Under the terms of the judgment, Naked Wines must comply with the Automatic Renewal Law going forward and, without admitting liability, pay $650,000 in costs and civil penalties. Also, under the judgement, any California customer who participated in the Wine Angel or Wine Genie program since April 2017 may be entitled to a full refund by making a written request to Naked Wines. Naked Wines cooperated fully in the investigation and has taken steps to improve its disclosures and sign-up process.