HelloFresh New Zealand has been fined NZD 845,000 for misleading consumers, in breach of the Fair Trading Act.
HelloFresh New Zealand, which operates in 18 countries and is a subsidiary of the world's largest meal-kit company, pleaded guilty to misleading consumers into reactivating their subscriptions to the food delivery service without their express knowledge or consent.
The penalty followed criminal charges laid by the Commerce Commission against the company. Commerce Commission Deputy Chair Anne Callinan said the case highlighted growing concerns around subscription-based services.
"This case should send a strong message to those who offer subscription-based services – you need to be transparent about your terms and ensure customers are giving informed consent when signing up to your service,” said Callinan.
The Commission added that HelloFresh's call strategy was centred on cold calling former customers, framed as a way to gather customer feedback.
In reality, the primary purpose of these calls was to reactivate customers by offering discount vouchers without making it clear that, if accepted, they could lead to the customers' paid subscriptions being reactivated.
"This was a lengthy and widespread call strategy from HelloFresh where the company managed to reactivate almost 80,000 customers' subscriptions over the course of 18 months, after attempting over a million calls to former customers. We found that this misleading practice was embedded in HelloFresh’s business processes - this was not a one-off issue."
The Commission received a high number of complaints about the way HelloFresh was operating, and this case was about fighting for those consumers against a large international company.
After listening to a sample of call recordings, Callinan said it was clear that agents glossed over or ignored customers, who on numerous occasions clearly stated they did not want to restart their subscription.
"These concerns were ignored, and we think that’s unacceptable."
Callinan added that consumers have the right to make informed choices, including knowing exactly what they’re signing up for, especially when it directly impacts their wallets.
Buying services through subscriptions is becoming more common, and with that, the risk of subscription traps is becoming a growing concern to the Commission.
Addressing any misleading online sales conduct, including subscription traps, is one of the Commission’s enforcement priorities.
The Commission has encouraged anyone who thinks they have been misled by a subscription-based service to contact the Commission via its website.
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