HelloFresh New Zealand has been fined $845,000 for
misleading consumers, in breach of the Fair Trading Act. The
penalty follows criminal charges laid by the Commerce
Commission against the company.
HelloFresh New
Zealand, 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 1million 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.
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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.
Addressing any
misleading online sales conduct, including subscription
traps is one of the Commission’s enforcement
priorities.
The Commission is encouraging anyone who
thinks they have been misled by a subscription-based service
to contact the Commission via
its website.
Background
This followed an
investigation into HelloFresh’s conduct between February
2022 and July 2023.
What is a subscription
trap?
Subscription traps can come in many
forms and include situations where consumers are misled into
signing up for a paid subscription without
knowing.
