Settles Auto-Renewal Lawsuit

PeopleConnect, owner of the social networking site, has settled a consumer protection lawsuit alleging the website did not properly inform its users regarding automatic subscription renewals, the Santa Monica City Attorney’s Office announced last week.

A final court judgment was entered last Monday by a San Diego judge that calls for PeopleConnect Inc, to pay to $550,000 to settle a consumer protection lawsuit filed by the California Automatic Renewal Task Force (CART).

The task force consists of the Santa Clara and San Diego District Attorney’s Offices, which took the lead in filing the case, along with the Santa Monica City Attorney’s Office, and the District Attorney’s Offices of Los Angeles and Santa Cruz counties.

The lawsuit alleged that website failed to comply with statewide disclosures requirements that apply to automatically-renewed subscription charges.

The lawsuit alleged that Classmates failed to abide by the following legal requirements:

· to properly disclose the automatic charges in a clear and conspicuous manner

· to get the consumer’s express consent to the automatic charges before charging the consumer

· to provide proper post-payment acknowledgement of the automatic charges

Under California law, online businesses must clearly disclose all automatic renewal charges and get the affirmative consent of those recurring fees before charging the consumer. Companies must also provide a clear acknowledgement of those terms and information on how to cancel, as well as provide a way for consumers to cancel easily online.

Under the ruling, PeopleConnect will pay $400,000 in civil penalties and costs, and $150,000 in restitution to customers whose payments were automatically renewed without their consent. The company will send out restitution notices by email to eligible consumers.

The company cooperated with the investigation and is in the process of changing its website to comply with California’s auto-renewal requirements, court officials said.


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