Complaints about subscription services are rising as more businesses adopt this model
The Commerce Commission has filed criminal charges against HelloFresh New Zealand, alleging the company misled consumers through cold calls that reactivated cancelled subscriptions without clear consent.
The charges, filed in the Wellington District Court, relate to conduct between February 2022 and July 2023.
According to the commission, HelloFresh contacted former customers with an offer of a discount voucher but did not clearly state that accepting the voucher would restart their food delivery subscription. As a result, some customers unknowingly had their accounts debited for services they had not explicitly agreed to resume.
Commerce Commission deputy chair Anne Callinan stated that the commission believes this practice breaches the Fair Trading Act.
“Taking payment for services customers aren’t aware they’re buying or have not agreed to purchase is unacceptable behaviour,” said Callinan.
The commission launched an investigation into HelloFresh after receiving a significant number of complaints regarding the company’s sign-up, cancellation, and reactivation processes. The complaints alleged that the company used misleading wording in cold calls, leading to unintended subscription renewals.
“In these calls, it was not made clear to some customers that if they accepted a discount voucher offered, their subscription would be reactivated, and their bank account would be debited,” Callinan added.
The commission has identified subscription traps as an increasing concern for consumers. These traps occur when customers are unknowingly enrolled in ongoing payment plans or face difficulties when trying to cancel a subscription. Callinan noted that complaints about subscription services are rising as more businesses shift to subscription-based models.
“Buying products online is increasingly a way of life for Kiwi consumers, and so the Commission is prioritising action against illegal online sales conduct. This includes subscription traps,” Callinan said.
The commission has made enforcing fair subscription practices one of its current priorities and has committed to taking action against misleading conduct in this area.
