Strikethrough Price Lawsuits

Retailers Settle Strikethrough Pricing Lawsuits

Strikethrough Price Lawsuits

In California and other states, several major retailers have settled strikethrough pricing lawsuits after being accused of violating false advertising laws. The lawsuits were filed in response to a common retail sales strategy: enticing customers to make purchases by highlighting comparison prices, which can include previous list prices that have since been reduced by the retailer or higher prices on similar items currently sold by competitors. This is especially prevalent among major retailers that advertise and sell products online. But comparison pricing is not without risks for the companies. That’s because there are both state and federal regulations of deceptive sale pricing. When a retailer violates these laws, it can lead to retail discount pricing litigation. Moreover, these lawsuits are often filed as class actions that involve many different consumers who were deceived into purchasing items because of deceptive pricing information.

To find out more about some of the major retailers that have been sued for strikethrough pricing violations, keep reading this blog.

Strikethrough Pricing in Retail Ads Can Violate California & Federal Consumer Protection Laws

Since price is often the deciding factor for consumers when the time comes to make a purchase, many retail companies use something known as compare-at pricing or strikethrough pricing. This is a sales and marketing strategy that emphasizes a product’s lower ticket price by comparing it to a higher list price or Manufacturer Suggested Retail Price (MSRP). Unfortunately, some retailers go too far with strikethrough pricing by offering deceptive discounts that mislead customers. Basically, the company mentions an inflated original price in an ad so that the “for sale” price appears greater by comparison.

What happens when a business misrepresents a sales price? For example, a company might offer a product at a perpetual sale price, meaning that it’s just a regular price that the company is lying about and passing off as a discounted price. Or a retail store might carelessly compare their price to another store’s price without acknowledging that the item offered at the other store is substantially different. It’s also possible that a business will use false reference pricing to compare their current price to a much higher price from many months or even years earlier. These kinds of fraudulent marketing and advertising practices may be unlawful violations of both California state and federal laws governing false advertising, consumer fraud, and unfair competition.

California Law

Under California’s comparison pricing law, retail companies that use reference prices when advertising or marketing their merchandise must follow strict guidelines. Most importantly, the original full price mentioned in the ad must be legitimate. If the item was never offered for sale at the higher price, or if it was only offered at that price for a short period of time, consumers may be able to file a lawsuit against the company for false advertising.

When a company cites a comparison price in an advertisement, they must be prepared to show that it was the prevailing market price within the three-month window preceding the publication of the ad. Absent that, the company must “clearly and conspicuously” indicate the date when the former price was in effect. Companies that fail to do either of these things may face consumer litigation in the form of a false advertising claim filed in California court.

Federal Law

The Federal Trade Commission (FTC) has a mission of enforcing federal consumer protection laws. To this end, the FTC has issued guidelines that strictly regulate former pricing. These promotional pricing guidelines stipulate that companies citing a former price in their ads or promotional materials must use an “actual, bona fide price” that was offered to the general public “on a regular basis for a reasonably substantial period of time.”

Major Retailers Named as Defendants in Comparison Pricing Lawsuits

Comparison pricing is a sales strategy used by retailers in a lot of different consumer categories:

  • Clothing & Department Stores: Dillard’s, JCPenney, Kmart, Kohls, Macy’s, Marshalls, Nordstrom, Ross Stores, Sears, Target, TJ Maxx
  • Auto Parts: Advance Auto Parts, AutoZone, Carquest, NAPA Auto Parts, O’Reilly Auto Parts, Pep Boys
  • Tools & Home Improvement: Ace Hardware, Harbor Freight Tools, The Home Depot, Lowe’s, True Value Hardware
  • Sporting Goods: Bass Pro Shops, Champs Sports, Dick’s Sporting Equipment, REI
  • Home & Kitchen Supplies: Bed Bath & Beyond, Best Buy, The Home Depot
  • Alcohol & Wine: BevMo, Total Wine & More

Calvin Klein, The Children’s Place, Dressbarn, Eddie Bauer, JCPenney, Pier 1 Imports, Shutterfly, and Zales are just some of the major retailers that have been named as defendants in nationwide class action lawsuits alleging false reference pricing. Other major retailers have been ordered to pay large judgments in California comparison pricing cases. For instance, a court ordered Overstock.com to pay almost $7 million when state regulators filed suit against the internet retailer.

Amazon Settles California Deceptive Pricing Lawsuit for $2 Million

California district attorneys also filed a complaint against Amazon for using unlawful comparison prices when advertising products. The case was brought by district attorney’s offices in six California counties: Alameda, Riverside, San Diego, Santa Clara, Santa Cruz, and Yolo.

The complaint, which was filed in San Diego Superior Court, alleged that the reference prices mentioned by Amazon in their ads did not match the prevailing market prices for the items being sold. The Amazon ads distinguished former prices from current prices by stating “Was” or “List” next to the higher price. Many of the online ads also had strikethrough lines across the former price, making it clear to consumers that the newer “sale” prices were lower. But California prosecutors said that these comparison prices were misleading because there was no evidence to suggest that they were real prices.

Shortly after the legal complaint was filed, Amazon agreed to settle the deceptive advertising case for approximately $2 million. This included civil penalties and restitution to the consumers who purchased products because of the misleading price listings. The court also ordered Amazon to make significant changes to its pricing disclosures in online ads. (E.g., including hyperlinks on the website that clearly define key terms such as “Was” and “List” when used with prices.)

Contact the California False Advertising Lawyers at Tauler Smith LLP

Tauler Smith LLP is a California law firm that represents consumers in false advertising cases throughout the United States. Call 310-590-3927 or send an email to find out if you might have a legal claim against a retailer for using deceptive comparison prices in product advertisements.

Deceptive Pricing Class Action

California Deceptive Pricing Class Action Lawsuits

Deceptive Pricing Class Action

It has become increasingly common for consumers to join California deceptive pricing class action lawsuits against retailers that market and sell products with deceptive pricing information. California’s false advertising law is often used as the basis for consumer class action litigation concerning false reference pricing because the state law is favorable to consumers. In recent years, there have been a number of class action suits filed in state court as consumers sued major retailers because of misleading pricing. Some of these cases settled, with the retail company agreeing to change their sales policies and paying out large settlement amounts to consumers. If you bought an item because of a comparison price in an advertisement, the Los Angeles consumer protection attorneys at Tauler Smith LLP can help you.

Keep reading this blog to learn more about California consumer class action lawsuits alleging deceptive pricing by retailers.

Reference Pricing Is a Tool Used by Retailers to Generate Sales

A comparison price, reference price, or strikethrough price might refer to the full price at which the retailer previously sold the product, the list price at which another seller currently offers the product, or the Manufacturer Suggested Retail Price (MSRP) of the product. Retail companies often rely on reference pricing as a marketing strategy to entice customers to make purchases by emphasizing that the ticket price represents a significant discount over full price. The idea is that the customer will see a sales price next to a higher regular price and be more likely to buy the item because it is on sale. This is commonly known as comparison pricing or strikethrough pricing (because the original price may have a line through it), and it can be an effective tool to increase sales revenues.

The general idea behind comparison pricing laws regulating these advertising strategies is that retailers should be transparent about the pricing of their products, including older prices that have been discounted for current sales. Common examples of unlawful comparison pricing include the following:

  • The retail company includes a former price in an advertisement even though the item was never offered at that price.
  • The company mentions a former price that was used in the distant past and is therefore no longer relevant. (Under the law, this may be allowed if the ad discloses when the former price was used.)
  • The retailer references a former price that was not used in the regular course of business.
  • The company uses a former price that may have been available to some customers but that was not openly offered to the public.
  • The retail company artificially inflates the initial price of an item just so that they can later reduce the price and misleadingly call it a “sale.”

Jurisdiction in Deceptive Pricing Class Action Lawsuits

The jurisdiction matters a great deal when bringing consumer litigation. For example, California’s law is more plaintiff-friendly than other states, with California courts often finding in favor of plaintiffs who file legal claims alleging false reference pricing. There is also a reduced standard for establishing economic injury in California cases, since the plaintiff merely needs to show that the former pricing representations were misleading and that the false information is what prompted the purchase.

It is also possible for consumers to file a federal comparison pricing claim. Federal Trade Commission (FTC) guidelines prohibit retailers from deceptive sale pricing that uses inflated former prices as a point of comparison. For example, companies are not allowed to artificially inflate the price of a product for a short period of time just so that they can later reduce the price and then claim that the product is “on sale.” In false advertising and unfair competition cases, a federal court may look to the intent of the business to determine whether the initial price was set high solely for the purpose of later offering a large discount. Evidence of this unlawful intent could be that the retailer immediately reduced the inflated price and did not maintain it for a reasonable amount of time.

Winning Your California Comparison Pricing Class Action

False advertising claims involving deceptive pricing information are often filed as class action lawsuits in California. That’s because the plaintiffs are typically consumers who made a single purchase of a discounted retail item. The good news is that when you join other consumers in a comparison price class action, you are more likely to get the benefit of experienced legal counsel that can help you and all the other plaintiffs get reimbursed for the difference in value from your purchase, as well as statutory damages.

Certifying the Class

A knowledgeable California consumer fraud lawyer can make sure that you meet the requirements of a class action suit, which include establishing commonality among all plaintiffs through similar questions of fact and law. For example, your attorney may be able to get the class of plaintiffs certified by showing that all class members were victimized by the retailer’s sales price misrepresentations and that the same deceptive advertisement with false former prices was used in all instances.

In a California comparison pricing class action, it might also be easier for additional members of the class to gain standing to sue. That’s because at least one California appellate court held, in Branca v. Nordstrom, Inc., that the class members in retail pricing cases do not necessarily need to have purchased the same retail items as the named plaintiff. Rather, all that is needed for the additional individuals to join the class action suit is proof that they purchased items advertised with a comparison price.

The Discovery Process

One major advantage to filing a class action consumer lawsuit in retail discount pricing litigation is that the defendant will be subject to discovery during the class certification process, and discovery could produce significant evidence of wrongdoing. In order to certify the class, the plaintiffs’ attorney must show that there are common questions of law or fact among the plaintiffs and that those common questions predominate over any individual issues in the case. Since the discovery process allows the plaintiffs’ attorney to request documents from the defendant, this is an opportunity to potentially press the retailer for emails, price reports, and other internal documents that the retailer might not want exposed.

Depending on the type of information that is turned over during discovery, the plaintiffs may have strong evidence that the retailer violated consumer protection laws and intentionally misled consumers with deceptive comparison prices.

Damages & Financial Compensation Available in California Strikethrough Pricing Cases

The damages that might be available to plaintiffs in California strikethrough price cases include both compensatory damages and statutory damages. This gives consumers a lot of leverage against a retail company that violates state or federal promotional pricing guidelines by using fraudulent advertising practices. Moreover, when the retailer engaged in willful violations of the law, they may be subject to treble damages that can triple the compensatory damages available in the case.

Contact the California Consumer Class Action Lawyers at Tauler Smith LLP

Tauler Smith is a Los Angeles law firm that represents plaintiffs in consumer class action litigation in California and across the U.S. If you bought a retail item because the retailer used deceptive advertising, you should contact our legal team today.

Call 310-590-3927 or email us to discuss your eligibility to join a consumer class action lawsuit.

Federal Law on False Reference Pricing

Federal Law on False Reference Pricing

Federal Law on False Reference Pricing

A lot of major retailers have an online presence these days with company websites and advertisements on social media platforms like Facebook, Twitter, and Instagram. The explosion in online sales has also led to competition between traditional retailers and e-commerce businesses that are all fighting for the same internet-savvy customers. Sometimes, those companies become too aggressive and employ fraudulent marketing practices, such as using deceptive pricing information in ads. This type of advertising violates the federal law on false reference pricing. If you purchased a product because of a comparison price in an advertisement, the experienced consumer protection lawyers at Tauler Smith LLP can help you file a lawsuit against the retailer and get financial compensation.

For more information about federal laws on deceptive pricing by retailers, keep reading.

Why Do Retail Companies Use Comparison Pricing in Advertisements?

It’s a simple fact that retail businesses often rely on sales to get customers to make purchases. That’s because sales and discounts on an item’s full price can be attention-grabbers in promotional materials and advertisements, particularly when the customer believes that they are getting a once-in-a-lifetime bargain or deal. One of the strategies that retailers utilize in their sales ads is to include strikethrough pricing or comparison pricing. This is when the business provides two prices that the customer can compare to each other: a former list price or MSRP and a reduced current price. The original price usually has a line through the text to differentiate it from the new lower price, and the price with the line through it is known as the strikethrough price.

Sometimes, consumers feel pressured to buy an item because they are worried that the sale won’t last. But when the discount wasn’t real to begin with because the “full price” was inflated, the consumer ends up being tricked into making a purchase. A retail company that violates comparison pricing laws by using deceptive advertising is subject to government investigations, retail discount pricing litigation, and significant monetary penalties. They may also be named as the defendant in a consumer class action lawsuit, where consumers could be eligible for both statutory damages and actual monetary damages. In fact, a number of consumer class action lawsuits alleging deceptive sale pricing have been filed against major retail companies in California and other states. Some of these cases concluded with judgments in favor of the plaintiffs, while others concluded with pre-trial settlements totaling tens of millions of dollars.

FTC Guides Against Deceptive Pricing

The federal government has laws against unfair competition, false advertising, and false reference pricing. The Federal Trade Commission (FTC) specifically regulates sales advertisements for retail companies involved in interstate commerce, which applies to most businesses that sell products online. The reason behind the law is that companies have been caught using misleading prices to deceive customers. For example, a retailer might frame their current price as a “sale price” even though it is the same as a regular price. This can be done by including a “compare at” or reference price in the advertisement.

The FTC gets its authority to investigate allegations of consumer fraud from the Federal Trade Commission Act, which includes the FTC Guides Against Deceptive Pricing. These promotional pricing guidelines set limits on when companies can use former price comparisons in advertisements. Generally speaking, any former price mentioned in an advertisement or promotion must have been offered honestly and in good faith. Other, more specific requirements of the FTC guidelines include the following:

  • The original higher price referenced in the ad needs to have been openly and actively offered for sale.
  • The item should have been available at the former price during the regular course of business.
  • The item needs to have been available at the former price recently, not in the distant past.
  • The former price must have been offered for a reasonably substantial period of time before being reduced.

Federal Law vs. California Law on False Reference Pricing

California’s law on false reference pricing is broader in scope than the federal law, which is why Los Angeles consumer protection lawyers often file these lawsuits in state court rather than U.S. district court. For instance, the federal guidelines are less clear than the California false advertising law when it comes to specifying timeframes for establishing the prevailing market price. The FTC guidelines state that companies must maintain a price for a reasonable length of time before reducing it; otherwise, the initial price may be considered a false reference price. Similarly, how long ago can the company go back to reference a former price? What is considered “reasonable” under these circumstances? Federal law is unclear on this, but the California comparison pricing law is explicit: any prices used during the previous 90 days may be allowed.

Although the federal law on comparison pricing isn’t as robust as the California law, it still imposes significant requirements on businesses that make former pricing representations in their advertising.

Winning Your Federal Comparison Pricing Lawsuit

When deciding whether you should take legal action against a company that engaged in sales price misrepresentation, you need to speak with an experienced consumer fraud attorney who understands the nuances of federal consumer protection laws. Depending on the facts of your case, it may be possible for the retailer to argue in court that you did not suffer any economic harm when you made the purchase because you ended up with a product that you wanted at the price that you expected to pay. The retailer’s argument would be that regardless of their false comparison pricing claims in the ad, you should not be entitled to financial compensation or damages.

A knowledgeable consumer protection attorney can help you prove the required elements of your claim, which includes showing that you relied on the false reference pricing and made the purchase because of the retailer’s misleading statements.

Contact the California False Advertising Attorneys at Tauler Smith LLP

The California false advertising attorneys at Tauler Smith LLP represent plaintiffs in consumer litigation throughout the United States. If you purchased a product online or in a retail store because of a comparison price mentioned in an advertisement, you may be able to file a lawsuit and get financial compensation.

Call or email us today to schedule a free consultation.

California Comparison Pricing

Comparison Pricing Litigation in California

California Comparison Pricing

It has become increasingly common for consumers to bring comparison pricing litigation in California. That’s because the state has some of the strongest consumer protection laws in the country, including laws that regulate unfair competition, false advertising, and deceptive pricing. California’s comparison price law requires retailers to provide accurate pricing information in advertisements, whether the ads appear in print media or online. The law recognizes that consumers should not be tricked into purchasing an item for the regular full price simply because the retailer included a fake sale price in an advertisement or promotion. If this has happened to you, one of the California false advertising lawyers at Tauler Smith LLP can help you.

To learn more about comparison pricing litigation in California, keep reading this blog.

Comparison Pricing Is a Retail Sales Strategy That May Violate California False Advertising Laws

Retailers that do business in California and elsewhere often use comparison pricing, reference pricing, strikethrough pricing, or compare-at pricing to persuade customers to make a purchase. All of these basically mean the same thing: the retail company prominently advertises that the item is “on sale,” and they back up this claim with a visual comparison between the current sale price and the original list price.

Comparison pricing is subject to strict regulations because lawmakers recognize that a lot of retailers go too far with deceptive ads that aren’t entirely honest about the former prices. For example, the reference price mentioned in the advertisement or promotion might be from a very long time ago, or it might be for an item that is not the same as the one currently being sold. Since the California comparison pricing law requires businesses to use actual sales prices that are relevant and timely, these types of former pricing representations with deceptive discounts could expose a retailer to consumer litigation.

California Has Strong Consumer Protection Laws

Under both federal and state consumer protection laws, retailers that do business in California cannot use fictitious price comparisons when advertising products. Consumers should also keep in mind that the comparison pricing laws apply to both in-person sales and online sales.

The jurisdiction where a comparison pricing lawsuit is filed can make all the difference when it comes to the outcome of a case. That’s because certain states have very strong consumer protection laws that hold businesses to extremely high standards for advertising, marketing, and sales practices. California has some of the strongest consumer fraud statutes, including §17501 of California’s Business & Professions Code that directly addresses fraudulent marketing and advertising practices.

Comparison Pricing Lawsuits Filed Against Retail Companies in Los Angeles

Failure to comply with California’s law on comparison pricing could expose retailers to significant liability, including a class action lawsuit filed by consumers who purchased products after viewing the misleading advertisement with deceptive sale pricing. Just some of the major retailers that have been sued under California’s false advertising law in recent years include Amazon, The Gap, Guess, J.Crew, Kate Spade & Company, Neiman Marcus Group, Overstock.com, and Walmart.

In California, the Los Angeles City Attorney’s Office has made a point of going after large retailers that use deceptive pricing in ads to generate sales. The crackdown on false reference pricing prompted the LA City Attorney to bring civil suits against several major department stores that did business in the city, including JCPenney, Kohl’s, Macy’s, and Sears. The retailers were accused of deceptively marketing thousands of items at “sale” prices that did not exist.

California’s False Advertising Law Prohibits Deceptive Prices in Retail Ads

Section 17501 of California’s false advertising law explicitly prohibits advertisements that use a misleading or inaccurate former price.

Actual Prices

The California law stipulates that there must be a legitimate basis for the comparison price cited by the retailer, whether it’s a list price or Manufacturer Suggested Retail Price (MSRP). Businesses are not allowed to create false impressions about discounts by referencing prices that never actually existed just to make the ticket price look like a good deal. The retailer must be prepared to provide proof that the item was previously sold for a higher price. But even that might not be enough for the retailer to avoid retail discount pricing litigation. For example, if the former price was only in effect for a short period of time, the retailer might not be legally allowed to mention this price in an advertisement because there will be serious questions about whether the original compare-at price was legitimate.

Three-Month Time Period

The California law places limits on the comparison prices that retail businesses may mention in an advertisement by explicitly barring them from mentioning an item’s former price unless it was the “prevailing market price” within the three months immediately preceding the ad’s publication.

But what happens when the company’s sale lasts longer than 90 days? In situations like this, California’s promotional pricing guidelines call for the company to revise its advertisement or run the risk of violating the strikethrough pricing statute. That’s because the former price listed in the ad will no longer fall within the 90-day window, which means that it’s no longer valid under the law. In other words, a sales ad that was initially legal will become illegal and could serve as the basis for a consumer to file a lawsuit.

Importantly, California does give retailers an opportunity to revise their ads so that they avoid violating the law. The company can either change the former price in the ad once it becomes outdated or they can “clearly, exactly, and conspicuously” note the date when the former price applied so that the advertisement is not misleading.

Define Relevant Terms

In addition to establishing a three-month timeframe for evaluating the appropriateness of the former price being advertised, the California false advertising statute also attempts to define relevant terms for retailers and consumers. For instance, what does the law mean by “prevailing market price”? This matters because the actual price of the item in question will go a long way toward determining whether the former price was legitimate or false.

Here, there are several factors that must be considered. For instance, what was the actual price of the item at other stores in the same geographical area or region? Also, were any sales made at that price? And, if so, how many units sold? Moreover, were there different prices for the item during the three-month period being evaluated? Since a court can consider any or all of these factors in a strikethrough pricing case, it is important for consumers to speak with a qualified California consumer protection attorney before making any final decisions about how to proceed with their case.

Standing to Sue in California Strikethrough Pricing Claims

It is often easier for plaintiffs to establish that they have standing to sue in a comparison pricing claim brought under California’s false advertising law. Of course, the plaintiffs in a California comparison pricing case must establish that they have standing to sue. In the past, this meant that the plaintiff needed to show that they purchased the item and that they did so at a price higher than they otherwise would have paid. Absent this showing, the door was open for defendants to argue that the plaintiff did not suffer any injury or economic harm because they received exactly what they paid for and therefore got “the benefit of the bargain.”

Things became much easier for plaintiffs when the California Supreme Court ruled in Kwikset Corp. v. Superior Court that plaintiffs in false advertising cases no longer need to prove that the product they purchased was worth less than the amount paid for it. Now, plaintiffs who bring a comparison pricing claim in California courts merely need to show that they purchased the item because of the deceptive pricing information in the ad; the prevailing market price or MSRP of the item no longer matter.

False Reference Pricing Class Action Lawsuits in California

California false advertising laws regulate companies that do business in the state, including broad protections against sales price misrepresentations. This has led to numerous class action lawsuits being filed on behalf of consumers who have fallen victim to false reference pricing.

It is important for consumers to recognize that they can file a civil suit, or join a consumer class action, even when the retail company does not have a physical brick-and-mortar location in California. As long as the consumer is in California and accessed the business’ website to view the ad or to make a purchase, they may be eligible to bring a Section 17501 claim for false reference pricing.

How Much Money Can Consumers Recover in a California Comparison Pricing Claim?

When a retailer is sued for violating California’s false advertising law, the monetary damages may be substantial. That’s because the statute allows for recovery of actual damages by the plaintiff, as well as the imposition of civil penalties against the defendant. These civil penalties can quickly add up because the defendant can be ordered to pay $2,500 for each violation of the law. Moreover, the court may have the option to impose an additional fine of $2,500 for each violation that injured a senior citizen or a disabled person.

Other California False Advertising Statutes: CCPA and CLRA

One strategy that retail companies might use to get around the California false advertising law is to hide their sales in customer loyalty programs. But this tactic may be a violation of the California Consumer Privacy Act (CCPA), which gives consumers another avenue for filing suit against retailers.

Additional legal claims that may be available in comparison pricing cases include violations of the Consumers Legal Remedies Act (CLRA), especially if the defendant’s conduct involved deceptive language in the advertisement.

Contact the California False Advertising Lawyers at Tauler Smith LLP

A lot of retailers use comparison prices in advertisements to encourage consumers to make a purchase while the item is “on sale.” If you bought a retail product because the retailer used deceptive pricing in a store ad or an online ad, you should speak with an experienced Los Angeles consumer protection attorney at Tauler Smith LLP.

Call 310-590-3927 or email us to schedule a free initial consultation.

California Consumer Privacy Act

California Consumer Privacy Act (CCPA)

California Consumer Privacy Act

California has some of the strongest consumer privacy laws in the country, and companies that violate those laws could face serious legal repercussions. For example, state residents have a right to privacy under the California Consumer Privacy Act (CCPA). These privacy rights exist when a prospective customer talks to a salesperson or customer service rep on the phone, communicates via an online chat feature, or fills out a form on a website. Anytime a company monitors, records, or uses the data collected in these communications without permission, it may be considered an unlawful invasion of privacy that subjects the offending company to civil penalties. Moreover, consumers whose personal information is exposed in a data breach may be entitled to recover statutory damages, which can total thousands of dollars.

To learn more about the California Consumer Privacy Act, keep reading this blog.

Digital Privacy Concerns for California Consumers

Digital privacy is a major concern in the internet era. Studies show that many Americans are worried about a lack of control over their personal information, particularly the information they share with companies on the internet. For example, a Pew Research Center survey found that approximately 60% of Americans believe that it is simply not possible to go through their daily lives without companies monitoring them and collecting their data. The same survey also showed that more than 80% of U.S. adults are concerned about how companies use the data that is collected.

State laws like the California Invasion of Privacy Act (CIPA) and the California Consumer Privacy Act (CCPA) recognize the importance of giving consumers some degree of control over their sensitive personal information. That’s why the CIPA requires companies to disclose when they are wiretapping or recording conversations, and the CCPA allows consumers to opt out of having their data shared by companies.

What Is the California Consumer Privacy Act?

In 2018, state legislators passed the California Consumer Privacy Act (CCPA). This was the very first state privacy law, and it has served as a model for other states looking to strengthen protections for consumer data. The CCPA imposes obligations on businesses that collect customer data, as well as specifically allowing consumers to make demands about how their personal information is used by businesses.

What Consumer Rights Are Protected by the CCPA?

Among the most important consumer rights protected by the California Consumer Privacy Act (CCPA) are:

  • The right for consumers to know exactly what type of personal information is collected by a business, including how that information will be used, shared, or sold by the business.
  • The right to request that any personal information collected by a business be deleted.
  • The right for consumers to submit an “opt-out” request and prevent a business from selling their personal information.
  • The right not to be discriminated against by a business simply for exercising consumer rights under the CCPA. This means that businesses cannot deny you the ability to purchase goods or services or otherwise complete a transaction just because you asked about the personal information they collect.

Filing a Civil Lawsuit Under the CCPA

In most cases, the California Consumer Protection Act (CCPA) does not create a private right of action that would allow consumers to file civil suits. But the California Attorney General does have the ability to take action against businesses that violate the CCPA. The possible civil penalties that may be imposed against companies include a fine of $7,500 for each violation of the data privacy law.

Additionally, there is at least one situation where a consumer may be able to bring a civil lawsuit: when the consumer’s personal information is exposed in a security breach because the business failed to follow adequate security procedures. Victims of data theft can file a claim under the CCPA to recover statutory damages of up to $750 for each incident.

Call the Los Angeles Consumer Privacy Lawyers at Tauler Smith LLP

Were you a victim of a data breach by a company that exposed your personal information? You need an experienced Los Angeles consumer protection lawyer who is familiar with the nuances of state privacy laws, including the California Consumer Privacy Act. The Los Angeles consumer privacy attorneys at Tauler Smith LLP are prepared to represent you in a civil suit, and we can help you get financial compensation for any harm you suffered when your privacy rights were infringed.

Call 310-590-3927 or send an email to schedule a free initial consultation about your case.

California Invasion of Privacy Act

California Invasion of Privacy Act (CIPA)

California Invasion of Privacy Act

It is quite common these days for businesses to monitor and record phone calls with customers, whether it’s to ensure that orders are accurate, to review employee interactions, or for some other reason. At the same time, new technologies have made it easier than ever to eavesdrop on private communications. Unfortunately, this has resulted in some companies going too far by invading the privacy of customers. The California Invasion of Privacy Act (CIPA) is a state law that makes it illegal for businesses to wiretap consumer communications and record you without your consent. Businesses that violate the CIPA may be subject to both criminal and civil penalties, including a lawsuit filed by any consumers whose conversations were wiretapped or recorded without permission.

To learn more about the California Invasion of Privacy Act, keep reading this blog.

What Is California’s Invasion of Privacy Law?

California has the nation’s strongest consumer protection laws, including the California Invasion of Privacy Act (CIPA), the California Consumer Privacy Act (CCPA), and the California Consumers Legal Remedies Act. The CCPA was enacted in 2018 to become the nation’s first state privacy law, and it strengthened protections for customer data collected by businesses online. The CIPA has a longer history, having been passed by the California State Legislature in 1967 for the purpose of more broadly protecting the privacy rights of all state residents, including consumers. Under the CIPA, it is illegal for companies to wiretap or record conversations unless all participants have consented to the recording. This applies to telephone conversations and online communications.

Cell Phones

Although the wiretapping law was initially intended to cover calls on landline phones, the use of cellular phones has been addressed by the statute. Cal. Pen. Code sections 632.5 and 632.6 specifically prohibit the use of a recording device when a call involves a cellular phone, whether it’s two cell phones or one cell phone and one landline phone.

Websites & Session Replay Software

In addition to recording phone conversations, a lot of companies also keep records of their interactions and communications with customers who visit a company website. This becomes problematic – and possibly illegal – when the company uses session replay software to capture visitor interactions with their website. That’s because the use of this type of tracking software may constitute an unlawful intercept of the communication, as defined by California’s wiretap law.

Session replay software allows website operators to monitor how a user interacts with the website. The tool then reproduces a video recording that shows the user’s interactions, including what they typed, where they scrolled, whether they highlighted text, and how long they stayed on certain pages. When companies employ this software, the very fact that a machine is being used to intercept customer communications constitutes a violation of the CIPA.

California Penal Code Section 631: Wiretapping

California Penal Code Section 631 forbids anyone from illegally wiretapping a conversation. The law specifically prohibits the following:

  • Using a machine to connect to a phone line.
  • Trying to read a phone message without the consent of all the parties participating in the conversation.
  • Using any information obtained through a wiretapped conversation.
  • Conspiring with another person to commit a wiretapping offense.

Some states allow a call to be recorded when just one participant is aware of the wiretap and consents to it, even if the person recording the call is the one providing consent. But California is a two-party consent state, which means that everyone involved in the call or chat must agree to it being recorded. If just one party does not provide consent, then recording the conversation constitutes a violation of the CIPA and can result in both criminal and civil penalties.

Out-of-State Businesses

Even if the person who called you or chatted with you was not located in California, you can still bring a lawsuit under the Invasion of Privacy Act as long as you were in the state at the time of the call or chat. That’s because out-of-state businesses must still comply with California laws when communicating with someone who is in the state.

California Penal Code Section 632: Eavesdropping

Section 632 of the California Penal Code addresses the crime of eavesdropping. Many times, a wiretapping case also involves eavesdropping offenses where the offending party both taps a phone line and listens in on the conversation. The main difference between the two is that eavesdropping does not necessarily involve the tapping of a phone line.

The statute defines “eavesdropping” as the use of a hidden electronic device to listen to a confidential communication. Significantly, the law is not limited to phone conversations. When someone intentionally eavesdrops on an in-person conversation, they may be subject to criminal charges and a civil suit for damages. The types of electronic devices that are often used to illegally eavesdrop include telephones, video cameras, surveillance cameras, microphones, and computers. If the device was concealed from one of the parties, it may constitute a violation of California’s eavesdropping laws.

Can You Sue for Invasion of Privacy in California?

Although the California Invasion of Privacy Act is technically a criminal statute, Cal. Pen. Code §637.2 gives victims of wiretapping and eavesdropping the ability to bring a civil suit against the person or company that illegally recorded the conversation. If you learn that someone was listening in on your private conversation without permission, you may be able to file a lawsuit to recover statutory damages.

How to Prove Invasion of Privacy Under the CIPA

To win your CIPA claim, you will need to prove that the conversation was illegally recorded in the first place. In some cases, this will be obvious because the business will reveal that they are monitoring and recording the call or chat. In other cases, consumers may learn about illegal wiretapping during the discovery process when the defendant is forced to turn over company records.

The other elements of a CIPA claim that you will need to establish at trial include:

  • The defendant intentionally used an electronic device to listen in on and/or record the conversation.
  • You had an expectation that the conversation would not be recorded.
  • You or at least one other person on the call did not consent to having the conversation recorded.
  • You suffered some kind of harm or injury as a result of your privacy rights being violated by the defendant.

The use of a cellular phone can change the burden of proof needed to win a CIPA claim. That’s because courts will typically use a strict liability standard when at least one of the participants on the call was using a cell phone. This means that the context and circumstances of the call won’t matter; the court will automatically presume that there was an expectation of privacy. Additionally, strict liability will apply to the defendant even when they did not realize that the other person on the call was using a cell phone.

What Is the Penalty for Invasion of Privacy?

The criminal penalties for violating the California Invasion of Privacy Act (CIPA) include possible jail time and significant fines. Businesses that violate the CIPA may also be exposed to civil penalties when a consumer files a lawsuit in state court.

Criminal Penalties

The CIPA gives criminal prosecutors wide latitude to charge an offense as either a misdemeanor or a felony, depending on the facts of the case. If a CIPA violation is charged as a misdemeanor, the defendant could be sentenced to one year in jail and ordered to pay up to $2,500 in statutory fines for each violation. If the violation is charged as a felony, the possible jail time could increase to three years. Additionally, anyone convicted of a second wiretapping offense could face more substantial fines.

Civil Penalties

The CIPA lists statutory penalties that may be imposed against companies or individuals who violate the statute. The court can order the defendant to pay $5,000 in statutory damages for each illegally recorded conversation, or three (3) times the actual economic damages you suffered because of the privacy breach. The judge in your case will have the option to choose whichever amount is greater: the statutory damages or the actual damages.

Depending on the circumstances of your case, you might also be able to file a right of publicity lawsuit. That’s because right of publicity claims and invasion of privacy claims often overlap, especially when a business attempts to profit from someone else’s image or likeness without consent.

California Invasion of Privacy Statute of Limitations

It is very important that you take immediate action and speak with a qualified consumer protection attorney as soon as you suspect that a company may have violated your privacy during a communication. That’s because the California Invasion of Privacy Act (CIPA) requires plaintiffs to file a civil suit within one (1) year of the date on which the conversation happened. Failure to bring your case before one year has passed could result in your lawsuit being dismissed.

The statute of limitations period typically begins when the plaintiff knew about the defendant’s illegal wiretapping. But what happens when the plaintiff did not learn about the invasion of privacy violation until later? In these cases, the court usually applies a reasonable person standard, which means that the court will attempt to determine the point at which a reasonable person standing in the shoes of the plaintiff would have known about the unlawful act by the defendant. In other words, should the plaintiff have discovered the privacy violation before the statute of limitations expired?

Contact the Los Angeles Consumer Protection Lawyers at Tauler Smith LLP

If a company invaded your privacy by secretly recording a conversation without your permission, you may be eligible to file a civil suit to recover statutory damages. The first step you should take is to speak with an experienced Los Angeles consumer protection attorney at Tauler Smith LLP. We can help you decide how to best proceed with your case.

Call 310-590-3927 or email us today.

Texas Telephone Solicitation Act

Texas Telephone Solicitation Act

Texas Telephone Solicitation Act

Telemarketing is an important tool used by many businesses to generate revenues, but it can also expose consumers to misinformation and fraud. That’s why Texas lawmakers passed important consumer protection laws that explicitly prohibit false, misleading, or deceptive practices. One such law is the Texas Telephone Solicitation Act, which regulates attempts by companies to sell or rent property, products, or services to consumers via telephone solicitation. The law is part of the Texas Business and Commerce Code, which protects consumers against a wide range of fraudulent business practices. The section of the statute governing telephone solicitations is meant to protect purchasers against false, misleading, or deceptive practices on sales calls. When a company makes a sales call, they must abide by the guidelines set forth in the statute. This includes filing a registration statement that contains relevant sales information, as well as making required disclosures to purchasers during telephone solicitations about both the company and the items for sale.

To learn more about the Texas Telephone Solicitation Act and the protections it affords consumers, keep reading this blog.

What Is the Texas Telephone Solicitation Act?

The Telephone Solicitation Act is codified in Texas Bus. & Com. Code, Title 10, Subtitle A, Chapter 302. The statute defines a “telephone solicitation” as a telephone call that is initiated to induce someone to buy, rent, claim, or receive an item. Importantly, the Texas law also covers phone calls made by consumers in response to a solicitation that was sent electronically (e.g., an email) or physically (e.g., a letter in the mail). Moreover, the law applies to calls placed manually, calls initiated by an automatic dialing machine, and calls that involve a recorded messaging device.

Telephone Solicitation Registration Requirements in Texas

The requirements of the Texas Telephone Solicitation Act are strictly enforced, with any violation by a telemarketer possibly triggering both civil and criminal penalties. The statute imposes requirements on companies both during the registration process and when the phone solicitation is made.

Seller Disclosures at Registration

Before making a telephone solicitation, sellers must first fill out a Telephone Solicitation Registration Statement and obtain a registration certificate for their business. Moreover, the registration statement must list each telephone number that will be used by the seller, as well as the specific locations from which any phone solicitations will be made. Other sales information that must be disclosed in the statement includes a copy of all telephone solicitation scripts and other material provided to salespersons, a copy of any written material that might be sent to consumers, and the contact information for outside product suppliers.

The registration statement is filed with the Texas Secretary of State, and it must identify each principal of the seller: owners, executive officers, general partners, trustees, etc. The registration certificate is valid for one year, and it must be renewed annually. Additionally, for every three-month period after the certificate was issued, the business must provide information for each salesperson who solicited on behalf of the business.

One of the most important requirements imposed by the Telephone Solicitation Act is the security requirement: sellers must submit a security deposit in the amount of $10,000. The deposit is meant to ensure that the seller complies with the law. When a seller is found to have violated the statute, the deposit may be used as payment for any penalties imposed by the court.

Seller Disclosures on the Call

In addition to requiring disclosures in the registration statement filed with the state, the Texas Telephone Solicitation Act also compels companies to make certain disclosures to consumers before a purchase is made through a phone solicitation. For example, prior to the finalization of any transaction on a sales call, the seller must provide the consumer with the street address of the building or office from which the call is being made. Additionally, if the seller tells the consumer that the item is being offered at a reduced price, the seller must provide the name of the manufacturer. Along those same lines, if the seller represents that one of the items is a gift or prize, then they also need to clearly state the contest rules.

The Telephone Solicitation Act also places a significant limitation on exactly what telemarketers are allowed to say during a sales call: the caller is not allowed to state or otherwise reference their supposed compliance with the statute. The idea behind this restriction is that sellers should not be able to discourage consumers from investigating on their own to determine whether a seller violated the law by making a deceptive sales call.

How to File a Civil Lawsuit Against a Telemarketer in Texas

Consumers who are defrauded, scammed, or otherwise injured by a telemarketer’s violation of the Telephone Solicitation Act can take legal action. Experienced Texas consumer fraud lawyers know just how strong the statute’s protections are, and they also know how to navigate the legal system to hold businesses accountable for violating the law.

One option available to consumers is to file a civil suit against the company or person who made the sales call. Any individual who suffered economic losses due to a seller breaching an agreement that was entered into during a telephone solicitation may be eligible to recover financial compensation against the seller’s security deposit with the state. It might also be possible for consumers to bring a claim under the Deceptive Trade Practices Act (DTPA) because a violation of the Telephone Solicitation Act qualifies as a violation of the DTPA. Additionally, a person bringing a civil action under either statute may be entitled to compensation for reasonable attorney’s fees and related legal expenses.

Burden of Proof

The protections set forth in the Texas Telephone Solicitation Act are far-reaching and tend to be interpreted broadly by judges. In fact, the statute even stipulates that the burden of proof in these cases will be on the defendant accused of violating the law. For example, in civil proceedings where the defendant argues that they are exempt from the law, the burden of proving the exemption will fall on the defendant. Similarly, a company or individual who faces criminal charges for violating the telephone solicitation law is required to produce evidence supporting their defense that they are exempt from the statute.

Which Sellers Are Exempt from the Texas Telephone Solicitation Act?

Some sellers accused of violating the Telephone Solicitation Act may be able to argue that the consumer protection law does not apply to them, but only in certain situations. Those who may be exempt from the statute include agents of publicly traded companies, sellers for banks or other supervised financial institutions, anyone associated with companies regulated by the Public Utility Commission of Texas, individuals who are already subject to regulation by the Federal Communications Commission (FCC), and educational institutions or nonprofit organizations that are exempt from taxation by the IRS. In many instances, exemption from the Telephone Solicitation Act is possible because another law or regulation applies instead and takes precedence.

The Texas Business and Commerce Code also includes explicit exemptions from the phone solicitation law for the following categories of sellers:

  • Anyone selling a subscription to a newspaper, magazine, or cable television service.
  • Anyone selling items to a consumer who has consented in advance to receiving periodic deliveries of those items.
  • Individuals or companies delivering catalogs that are distributed in at least one other state and that have a circulation of at least 250,000 customers.
  • Anyone selling items to a business that plans to resell the items.
  • Persons or companies attempting to sell food products.
  • Persons calling about maintenance or repair of an item that was previously purchased from them.
  • Businesses soliciting a former or current customer.

Criminal and Civil Penalties Imposed by the Texas Telephone Solicitation Act

Every individual violation of a provision in the Texas Telephone Solicitation Act is considered a separate offense, which means that the penalties can add up very quickly even when the offenses stem from a single sales call. Beyond that, there can be both civil and criminal penalties imposed against sellers who violate the statute.

Criminal Penalties

Violations that may be charged as criminal offenses include failing to obtain the necessary registration certificate before making a phone solicitation, failing to make necessary disclosures to the consumer before finalizing a sale, and mentioning compliance with the statute on the sales call. Each of these offenses can be charged as a class A misdemeanor, which carries a possible fine of $4,000 and a sentence of up to one year in jail. Moreover, these criminal penalties can be imposed against both the business owner and the salesperson or telemarketer who made the call. Additionally, the defendant in a criminal action may be ordered to pay the costs of prosecuting the case, including the attorney general’s expenses for the investigation, depositions, witnesses, and related attorney’s fees.

Civil Penalties

Sellers who violate a provision in the Texas Telephone Solicitation Act are also subject to civil penalties. These penalties can be substantial, with the statute calling for a fine of up to $5,000 for each violation. The penalties become even harsher when the seller violates an injunction brought by the secretary of state for a previous offense: a $25,000 fine for each subsequent violation, plus an additional $50,000 fine for all violations after the injunction was issued.

Contact the Texas Consumer Protection Lawyers at Tauler Smith LLP

Did you receive a telemarketing call from a person who failed to identify themselves, their business, or their reason for calling? Did the telemarketer’s attempts to sell you something feel like part of a scam? The Texas Telephone Solicitation Act gives consumers the ability to take legal action by notifying the secretary of state and possibly filing a civil suit, and the Texas consumer protection attorneys at Tauler Smith LLP can help you.

Call or email us today to discuss your case.

NY Automatic Renewal Law

New York’s Automatic Renewal Law

NY Automatic Renewal Law

New York’s Automatic Renewal Law (ARL) protects consumers by prohibiting businesses from engaging in certain practices when making an automatic renewal offer in the state. The New York ARL tracks California’s strict statutory requirements, which means that businesses must follow guidelines about disclosing renewal offer terms to consumers, giving customers the opportunity to affirmatively consent before they sign up for an auto-renewal program, and allowing customers to easily cancel their subscription afterwards. NY consumers who have enrolled in a subscription program without their consent should immediately reach out to a qualified New York false advertising attorney who understands both state and federal laws on auto-renewal offers.

To learn more about the New York automatic renewal law, keep reading this blog.

NY Automatic Renewal Bill: SB 1475

New York’s Automatic Renewal Law (ARL) is set forth in New York State Senate Bill S1475A. The law went into effect in February 2021 after being passed by the New York State Legislature and signed by NY Governor Andrew Cuomo. SB 1475 greatly expanded the scope of the state’s previous automatic renewal law, New York General Obligations Law § 5-903. The new ARL added substantial requirements for businesses that offer either automatic renewal plans or continuous service plans to consumers, including a stricter requirement that businesses notify consumers of the subscription terms after enrollment. Additionally, SB 1475 expanded the old law’s scope beyond service, maintenance, and repair contracts to also include consumer contracts involving “any goods, services, money, or credit for personal, family, or household purposes.”

New York businesses that offer auto-renewal subscription services to consumers must comply with SB 1475, relevant federal laws, and any other state ARLs which may be applicable if the purchase was made online by an out-of-state customer. Additionally, these businesses must also comply with New York’s older ARL, which remains in effect even after the passage of the new law.

New York ARL Requirements for Businesses

The New York ARL imposes the following requirements on businesses that offer consumer contracts for automatically renewing subscription services:

  • Auto-renewal terms must be conspicuous. The auto-renewal terms should be in visual proximity to the section where the consumer provides affirmative consent, and the terms should also stand out visually from the rest of the offer. (E.g., different text sizes, different fonts, and different colors.)
  • Auto-renewal terms must be clear. The terms and conditions of the subscription service must be easy for the consumer to understand. The exact language used by the NY ARL is that the offer terms should be presented “in a manner capable of being retained by the consumer.” (E.g., the offer should clearly state that the subscription will continue until the purchaser cancels.)
  • Must obtain affirmative consent from purchaser. The customer needs to affirmatively consent to the automatic renewal terms before it becomes a legally binding contract. Otherwise, NY law stipulates that any goods received by the consumer are an “unconditional gift” and do not need to be paid for.
  • Must send enrollment acknowledgement to consumer. After the customer has enrolled in the subscription program, the business needs to send a letter, email, or other type of written acknowledgement that states the program’s terms and cancelation policy.
  • Cancelation policy must match method used to subscribe. When a customer uses a company’s website to enroll in a subscription program, the company must allow the customer to cancel online.
  • Free trial offers must have cancelation options. If the company offers a “free” trial period before the subscription automatically renews for a monthly fee, the company needs to provide the consumer with the ability to opt out of the paid subscription service. Additionally, the cancelation policy must be presented clearly and conspicuously in the original agreement.
  • Must disclose any material changes to the agreement. It is common for businesses to modify their agreements later. But if a business wants to change the terms of an auto-renewal plan, they must have already alerted the consumer to this possibility in the original offer. Moreover, when making material changes to its subscription plan, the business must disclose those changes to the consumer and give the consumer an easy way to cancel their subscription.

Defenses Available to Businesses Accused of Violating the NY ARL

Although New York’s ARL provides strong protections to consumers who enroll in auto-renewal plans, there are some exceptions to the law that allow businesses to raise possible defenses against an alleged violation. For instance, the new ARL only applies to contracts for subscriptions involving consumers; business-to-business contract are addressed by the state’s old ARL.

SB 1475 also has a “safe harbor” provision that gives companies a possible defense when the violation was unintentional. If the company can show that they made a bona fide error despite taking reasonable measures to comply with the law, the New York Attorney General may choose not to bring charges.

What Remedies Are Available to Consumers in NY ARL Cases?

Compliance with the New York ARL is enforced by the NY Attorney General. The statute gives the state Attorney General authority to fine businesses as much as $100 for each violation of the auto-renewal law. When the violation was knowing and intentional, the fine can be increased to $500 for each violation. For companies with popular services and large subscription bases, these fines can add up quickly and serve as an effective deterrent against further abuse.

The individual consumers who enrolled in the unlawful subscription services also stand to benefit financially under New York’s auto-renewal law. That’s because the statute specifies that consumers who receive a service or product without providing affirmative consent for enrollment in the subscription program will not have to pay for the goods or services received. Additionally, they may be eligible to join a consumer class action lawsuit brought under one of the state’s consumer protection laws.

Contact the New York False Advertising Lawyers at Tauler Smith LLP

Tauler Smith LLP is a law firm that represents clients in consumer fraud litigation throughout the United States, including New York. Our experienced NY false advertising lawyers have filed complaints on behalf of clients in both federal and state court, and we know how to win these cases. Call or email us to speak with a member of our litigation team.

California Automatic Renewal Law

California’s Automatic Renewal Law

California Automatic Renewal LawThe explosion of the internet and e-commerce has led many businesses to offer their products and services through online subscription services. This has made it easier for consumers to quickly make purchases from their phone or computer, and it has also made it easier for companies to lock customers into subscriptions that renew automatically. These auto-renewal plans become problematic when companies use them to take advantage of customers who might not realize what they are signing up for. California’s Automatic Renewal Law (ARL) was a direct response to this problem, with state lawmakers codifying strong protections for consumers in these situations. The California ARL specifically requires businesses disclose all relevant subscription terms to customers, get consent from the customers before charging their credit cards, and provide customers with a way to easily cancel the contract.

To learn more about the California automatic renewal law, keep reading.

What Requirements Does California’s ARL Impose on Businesses?

Automatic renewal subscriptions affecting California consumers are governed by the state’s Automatic Renewal Law (ARL), which is set forth in Cal. Bus. & Prof. Code §§ 17600. The California ARL requires companies to clearly and conspicuously explain “automatic renewal offer terms.” State legislators passed the law for the purpose of stopping companies from continually charging consumer credit or debit cards without the consumers’ explicit consent for ongoing shipments of products or ongoing provision of services.

When a business violates the ARL by failing to properly disclose information about an auto-renewal offer, it may be possible for the customer to file a consumer fraud lawsuit and seek financial compensation from the business. If you have been billed for an automatically renewing subscription that you did not want to be enrolled in, your first step should be to speak with a California false advertising lawyer.

What Information Must Be Disclosed in California Auto-Renewal Offers?

California’s Automatic Renewal Law (ARL) is among the most consumer-friendly in the entire country, with other states modeling their own ARLs after it.

The California ARL requires companies to disclose the following information before a customer enrolls in an automatic subscription program:

  1. That the subscription will continue until the consumer cancels.
  2. A description of the policy for canceling the subscription.
  3. Any recurring charges that will be charged to the consumer’s credit card, debit card, or bank account as part of the automatic renewal plan, as well as whether the amount of the charge may change and how often the consumer will be billed.
  4. The length of the automatic renewal term. (If the service is continuous, this must also be disclosed.)
  5. Any minimum purchase obligation.

“Clear and Conspicuous” Disclosures Required Under California’s ARL

Importantly, section 17602 of the California ARL requires that the automatic renewal offer terms must be presented to the consumer both before the purchasing contract is fulfilled and after enrollment in the form of an email or other post-sale acknowledgement. There can be no concealing of the auto-renewal offer at any point in the process. Moreover, there can be no attempts by the company to thwart or frustrate a customer’s attempts to cancel the subscription. That’s because the ARL explicitly requires businesses to provide a “cost-effective, timely, and easy-to-use mechanism for cancelation.”

Additionally, those disclosures must be plainly visible and obvious to the customer. In fact, there are strict guidelines for the manner in which the information is presented. For example, the terms of the automatic subscription service must be in “visual proximity” to the request for consent to the offer. Those terms must also be presented “clearly and conspicuously” so that they can be distinguished from the rest of the offer. This means that the text of the auto-renewal offer should be:

  • In larger type than the surrounding text.
  • In contrasting type, font, or color to the surrounding text of the same size.
  • Set off from the surrounding text of the same size by symbols or other marks in a manner that clearly calls attention to the language.

Remedies Available Under California’s Auto-Renewal Law

What happens when a company violates the California automatic renewal law (ARL) by failing to clearly and conspicuously disclose the terms and conditions of a subscription service? The answer to this question depends on the facts and circumstances of your particular case, which is why it’s important for you to speak with a Los Angeles false advertising attorney who has knowledge of both state and federal automatic renewal laws, as well as other applicable California consumer protection laws. An experienced attorney may be able to force the company to stop its misleading sale and advertisement of services, in addition to helping you get full restitution of any expenses you’ve already incurred. In some cases, you may also be entitled to additional financial compensation for your losses or harm suffered.

Call the Los Angeles False Advertising Lawyers at Tauler Smith LLP

Tauler Smith LLP is a Los Angeles law firm that focuses on consumer fraud litigation, including violations of the California Automatic Renewal Law (ARL). Our false advertising lawyers represent plaintiffs in lawsuits filed against companies that misrepresent or fail to disclose the terms of their monthly subscription contracts. Call 310-590-3927 or email us to schedule a free consultation.

Macy’s Beauty Box Lawsuit

Macy’s Faces Lawsuit for Beauty Box Automatic Subscription

Macy’s Beauty Box Lawsuit

High-end department store Macy’s faces a lawsuit for its Beauty Box automatic subscription service. The company has been accused of violating consumer protection laws by using deceptive practices to enroll customers in an auto-renewal program for one of its popular beauty product services. Law firm Tauler Smith LLP believes that many people have probably fallen victim to Macy’s allegedly unlawful subscription practices. Since a lot of states like New York, California, and others have strict laws regulating automatic renewals, anyone who purchased the Macy’s Beauty Box from the Macys.com website may be able to file a lawsuit for financial compensation.

Tauler Smith LLP is looking to certify a class of plaintiffs nationwide for a class action lawsuit against Macy’s. If you purchased the Macy’s Beauty Box and were later charged for an ongoing subscription to which you did not consent, you should contact one of our lawyers immediately.

Macy’s Accused of Consumer Fraud

Macy’s Beauty Box is a monthly subscription package of deluxe beauty samples and beauty-related products that has attracted many customers. Unfortunately, the Beauty Box program’s terms and conditions are not always made clear to customers, which has exposed Macy’s to being named as a defendant in lawsuits in California, New York, and other states with strong consumer protection laws. For instance, the automatic renewal terms of Macy’s Beauty Box subscription program may be a violation of both the California Consumers Legal Remedies Act (CLRA) and the California Automatic Renewal Law (ARL). Specifically, Macy’s is enrolling customers into an automatic renewal subscription without providing the clear and conspicuous disclosures required by California law.

Some consumers may be unaware that they are being enrolled in an auto-renewal program when purchasing the Macy’s Beauty Box from the store’s website. For example, at least one customer has complained that she did not notice a second charge appearing on her credit card more than one month after her initial purchase. In fact, the entire checkout process on Macys.com appears to be designed to conceal the nature of the automatically renewing subscription and recurring charges. This could make it a clear violation of state consumer fraud laws, including automatic renewal laws.

Does Macy’s Beauty Box Subscription Service Violate Auto-Renewal Laws?

Macy’s, Inc. has been accused of committing numerous violations of automatic renewal laws, including the following:

  • Failure to clearly and conspicuously disclose auto-renewal terms.
  • Failure to disclose when and how often customers will be automatically billed.
  • Failure to inform customers of cancelation policy.
  • Making it difficult for customers to cancel subscription.
  • Failure to send email or other notification to customers after enrollment.

Clear & Conspicuous Disclosure

Macy’s has been accused of failing to clearly and conspicuously disclose its automatic renewal terms to customers who purchase the Macy’s Beauty Box on the store’s website. Although online customers check a box to indicate consent to be enrolled into a monthly subscription service, this box is not clear and conspicuous in the manner required by California’s ARL. For example, Macy’s does not present the auto-renewal offer terms in a larger type font than the surrounding text, nor is the text in the box distinguishable from the surrounding text via contrasting type, font, or color.

One way that Macy’s could have more clearly called attention to the automatic subscription language is by using bold, highlighted, all-capitalized, or different-colored text for the automatic renewal terms. Macy’s also could have employed a “call out” box near the terms so that the subscription enrollment contract was distinct from the product purchase agreement.

Timing of Automatic Charges

Macy’s does not adequately disclose the timing of the automatic charges. For example, the store represents that its customers will be automatically charged “monthly,” but the actual charges to consumers appear to occur in arbitrary intervals. For example, at least one customer was charged on her credit card 49 days after the initial charge.

Cancelation Policy

Macy’s does not adequately disclose how a customer can cancel their subscription. This information could be disclosed either directly on the Macy’s website or in an email sent to the customer after enrollment in the subscription service.

Frustrating Attempts to Cancel Subscription

Macy’s has failed to make it easy for a customer to cancel the subscription. In fact, it appears that Macy’s has intentionally made the cancelation process difficult and frustrating in the hopes that customers will abandon trying to cancel their subscriptions.

Email Acknowledgement After Enrollment

Macy’s fails to send an ARL-compliant retainable acknowledgement consistent with state consumer protection laws. When a customer enrolls in the Beauty Box subscription program, they do not receive an email from Macy’s that accurately explains the terms and conditions of the service. The absence of an email also means that customers are not informed of the policy for canceling the subscription. By failing to provide a permanently retainable post-transaction acknowledgement that allows for cancelation before payment, Macy’s is effectively concealing the nature of the agreement and violating state automatic renewal laws meant to protect consumers.

Macy’s Accused of Violating California’s Consumers Legal Remedies Act (CLRA)

In addition to possibly violating state automatic renewal laws, Macy’s has also been accused of violating broader consumer protection laws, such as the California Consumers Legal Remedies Act (CLRA). In California, a violation of the ARL can form the basis for a CLRA claim, as well as a claim under California’s Unfair Competition Law. One of the unlawful business practices that Macy’s has been accused of is failing to include a clear and conspicuous explanation of the price that will be charged for its Beauty Box subscription service. Another more general accusation against Macy’s is that the company fails to first obtain affirmative consent from customers before charging their credit and debit cards. All of these practices constitute violations of the ARL, which means that affected consumers may also be able to file lawsuits under the CLRA and other statutes.

Tauler Smith LLP Pursuing Class Action Lawsuit Against Macy’s for ARL Violations

Tauler Smith LLP is a law firm that represents consumers in false advertising claims in California, New York, and nationwide. We suspect that thousands of consumers may have been illegally enrolled in Macy’s Beauty Box subscription program. Our consumer protection lawyers are actively seeking plaintiffs for a possible class action lawsuit against Macy’s. The lawsuit seeks the following remedies on behalf of affected consumers:

  • Full financial restitution to all purchasers throughout the United States of all purchase money obtained from the sales of Macy’s services and products that violate automatic renewal laws.
  • Monetary compensation for any damages suffered by consumers because of Macy’s unlawful business practices.
  • Punitive damages for knowing and egregious violations.
  • An injunction ordering Macy’s to cease and desist from the continued misleading sale and advertisement of its Beauty Box services.
  • A corrective advertising campaign by Macy’s to inform consumers about the true price of any services they purchase, including any automatically renewing charges in connection with those services.
  • Payment by Macy’s of all reasonable attorney’s fees and court costs related to the lawsuit.
  • Additions to the Macy’s website that include a clear and conspicuous explanation of the amount customers will be charged for the Macy’s Beauty Box subscription service.
  • The inclusion of a mechanism for obtaining customers’ affirmative consent before Macy’s charges their credit and debit cards.
  • An email or other post-transaction acknowledgement sent by Macy’s to customers that will allow for cancelation of the subscription service before the first payment.

Did You Purchase the Macy’s Beauty Box? Contact the False Advertising Lawyers at Tauler Smith LLP

Were you enrolled in a monthly subscription service after purchasing the Macy’s Beauty Box, or any other product, from the Macys.com website? The false advertising attorneys at Tauler Smith LLP represent plaintiffs in pre-trial settlement negotiations and at trial, and we have helped countless clients achieve successful outcomes that include restitution and financial compensation. We are looking for plaintiffs nationwide in a possible class action lawsuit against Macy’s.

Call or email us to discuss your eligibility to join the lawsuit.