An online grocery delivery company will pay $1.55 million to settle a consumer protection lawsuit filed in part by the Santa Clara County District Attorney’s Office over allegations of false advertising and automatically renewing customer subscriptions.
The lawsuit filed by five California district attorneys said Thrive Market Technologies Inc., doing business as Thrive Market, an e-commerce membership-based grocery delivery service offering natural and organic food products, violated parts of California’s Automatic Renewal Law and False Advertising Law.
As part of the settlement, Thrive Market will pay $1,004,000 in civil penalties, $96,000 in investigative costs, and $450,000 in restitution.
“Consumer protection laws are the cornerstone of a fair and competitive marketplace, safeguarding consumers from deceptive business practices,” District Attorney Jeff Rosen said. “We must continue to ensure that all businesses are playing by the same rules.”
The Santa Clara County District Attorney’s Office joined the Santa Barbara, Santa Cruz, San Diego, and Los Angeles County District Attorney’s Offices as well as the Santa Monica City Attorney’s Office in bringing this consumer protection action as members of the California Automatic Renewal Task Force (CART). The case was filed in Santa Barbara County Superior Court, and the settlement was approved on April 30, by Judge Colleen K. Sterne.
State law prohibits companies from automatically renewing consumers’ subscriptions without clearly and conspicuously disclosing the subscription terms and obtaining the consumer’s affirmative consent, said prosecutors.
Companies are also required to provide a post-purchase acknowledgement that contains the required disclosures and explains how to cancel the subscription, and state law also prohibits companies from misrepresenting their products and services.
Rosen said that California consumers currently subscribed to Thrive Market are eligible for a proportional share of the restitution, which will be directly credited to eligible accounts as Thrive Cash. Thrive Market worked cooperatively throughout the investigation and made changes to its website, automatic renewal notices, and advertising practices.
