Meal kit delivery company HelloFresh has agreed to pay $7.5 million to settle allegations of what prosecutors called "deceptive subscription practices" in California.
The settlement was announced Monday by district attorneys in both Los Angeles and Santa Clara counties, which jointly filed the lawsuit that led to the settlement.
The plaintiff argues that HelloFresh's policies violated the state's Automatic Renewal Law by "deceptively enrolling consumers into auto-renewing subscription plans without proper disclosure or consent," according to a statement from Los Angeles County District Attorney Nathan Hochman's office.
"No company, no matter how big or well-known, is exempt from California’s consumer protection laws," Hochman said. "We will aggressively pursue enforcement when businesses take advantage of consumers by failing to clearly disclose subscription terms, obtain proper consent, or provide a fair way to cancel. Consumers have a right to know what they’re signing up for, and they deserve better. Digital deception is still deception under the law."
HelloFresh admitted no liability in the settlement.
What were the allegations leveled against HelloFresh in California?
Prosecutors alleged HelloFresh placed customers into ongoing subscriptions without proper notice or authorization.
The Santa Clara District Attorney's Office also accused the company of making it difficult for customers to cancel subscriptions.
"The meal kit delivery company, the largest in the U.S., also failed to disclose the material terms and conditions of advertised free meals, surprise gifts, and free shipping offers, among other false and misleading advertising allegations," Santa Clara D.A.'s officials said in a written statement. "These actions are violations of California’s Automatic Renewal Law and False Advertising Law."
The civil complaint alleged that HelloFresh failed to clearly disclose subscription terms prior to collecting payment; was unable to obtain customers' affirmative consent before charging their credit or debit cards; failed to provide post-transaction acknowledgments of subscriptions; and failed to offer an easy mechanism to cancel subscriptions.
“Misleading automatic renewal subscriptions and false advertising practices don’t sell products – they sell deception,” according to Santa Clara County D.A. Jeff Rosen. “Stop means stop.”
HelloFresh denies wrongdoing
HelloFresh representatives told CBS News that the company's policies were fair.
"We take our commitment to customer transparency very seriously, and our subscription model and cancellation policies have been consistently clear to customers throughout the whole customer journey," according to a statement from the company. "While we deny any wrongdoing, we have cooperated fully with the coalition of California District Attorneys and have entered into a settlement agreement with them to resolve the matter amicably."
Where will the settlement money go?
Of the $7.5 million settlement, $6.38 million will be divided between the prosecuting agencies in the form of civil penalties, according to the L.A. County D.A.'s Office.
$1 million of the settlement will be paid as restitution to eligible California consumers, officials added. $120,000 will be used to cover investigative costs.
HelloFresh makes up roughly 75% of the meal kit delivery market in the U.S., officials said.
The case was investigated by the California Automatic Renewal Task Force, or CART, Hochman said.
The program was started in 2015 to address consumer complaints about improper subscription practices and comprises prosecutors from Los Angeles, Santa Clara, Santa Barbara, Santa Cruz, and San Diego counties, as well as the city of Santa Monica.
Who is eligible for restitution from Hello Fresh?
According to the settlement, eligible consumers are those who:
Were enrolled in automatic renewal product subscriptions between Jan. 1, 2019, and Aug. 18, 2025.
Were charged for the first shipment without their knowledge or consent.
Canceled their automatic renewal subscription after the first shipment.
Never received a refund from HelloFresh.
These individuals will receive notices from the third-party administrator detailing how to submit a claim.
This article originally appeared on Palm Springs Desert Sun: HelloFresh to pay $7.5M in California subscription settlement
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