A coalition of government agencies, including the Santa Monica City Attorney’s Office, recently secured a settlement with a pair of wine clubs over illegal automatic renewals as part of an ongoing state-wide effort to protect consumers.
The Los Angeles, San Diego, Santa Clara and Santa Cruz county district attorney’s offices and the Santa Monica City Attorney filed lawsuits against Direct Wines and Wine Awesomeness that resulted in a total settlement of $365,000 and an agreement from the companies to change their sales practices.
In California, businesses must clearly and conspicuously disclose all automatic renewal charges and terms and get affirmative consent of those recurring charges from consumers. Prosecutors said the violations involved wines sold by Delaware-based Direct Wines, a wine club marketing company, and Wine Awesomeness, a South Carolina wine retailer, which allowed people to subscribe to wine bottle home deliveries.
In addition to the fine, the companies must disclose its terms, alter the process for charging customers, offer easy cancellation options (including an online option) and make cancellations effective upon request.
The defendants did not admit wrongdoing in the stipulated judgments but worked cooperatively with prosecutors to amend their business practices to ensure compliance with the state’s automatic renewal laws.
The current settlement came from the California Automatic Renewal Task Force (CART) with the San Diego, Santa Clara, and Santa Cruz district attorney’s offices, and the Santa Monica City Attorney’s Office all working collaboratively on the case.
“The goal of CART is to address the automatic renewal issues that have troubled many consumers when they purchase goods and services online,” said the Los Angeles District Attorney’s Office. “CART finds that some businesses do not properly disclose to their customers that their subscriptions would be automatically renewed until canceled by the customers. Such deficient disclosure is not limited to a particular industry.”
Deputy District Attorney Jessie McGrath said working as a group magnifies the ability of the individual agencies to secure meaningful settlements and helps split the work among agencies with specific skills.
“It gives us more clout but it also gives us the ability to have more violations because when you bring in these counties you’re bringing in a lot more of the population base of the state. We cover a majority of the state and have the ability to seek statewide penalties for violations, and correct it on a statewide basis.”
Santa Monica is a founding member of the team and McGrath said the City brings a has expertise in this area and bringing them in was a good match with the other agencies.
“They knew how to do the investigations and how to do the settlements,” she said. “It just worked out really well that they were experts in this particular area.”
Eda Suh, Chief of the City’s Consumer Protection Division said Santa Monica has been a leader in fighting automatic renewals for years including successful cases against dating websites, direct marketers, supplement companies and others.
“It impacts all California consumers and it’s in our daily lives,” she said. “We live in an area of credit cards and online services for products and services, with subscriptions paying on an automatic basis. That has become the norm now. Through the last couple of years, Santa Monica has kept up with the law and consistently enforced it.”
She said it’s important to keep the public aware of their rights in consumer cases and keep companies honest.
“You have to make sure consumer know what they are doing,” she said. “It is everywhere, you cannot escape it.”