Neopets.com Class-Action Lawsuit
Neopets, Inc. offers consumers a virtual pet experience through a website located on the Neopets.com domain. In a class action filed in federal court [California Central District Court case no. 2:15-cv-08395] brought on behalf of a John Doe plaintiff, Neopets is accused of violating more or less every aspect of what is loosely known as the California Automatic Renewal Law. Under this law, a party automatically billing California citizens on a continuous basis must generally:
- Present the automatic renewal offer terms in a clear and conspicuous manner before the consumer agrees to take the requested billable action and in visual proximity to the request for consent to the offer.
- Charge the consumer’s payment resource only after first obtaining the consumer’s affirmative consent to the agreement containing the automatic renewal offer terms.
- Fail to provide an acknowledgment that includes the automatic renewal or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner that is capable of being retained by the consumer.
The requirements under the law are far more detailed, and companies should work with legal counsel to implement a compliance process for the law.
The plaintiffs in the current case allege Neopets, Inc. failed to comply with any of the three elements noted above. If true, the company is facing a large settlement. The screenshots of the sign-up process for Neopets.com included in the complaint suggest the company may be in serious trouble and facing damages in the seven or eight-figure range.
The Neopets, Inc., class action lawsuit should act as yet another warning shot across the bow of companies automatically billing consumers on a recurring basis. If you are taking this approach, the question is simple – are you complying with the California Automatic Renewal Law? If not, your business faces exposure to millions in potential damages and attorney’s fees.
Richard A. Chapo, Esq.