Subscription-Based Website Hit With Class Action After Failure To Make Refunds

A suggestion that all direct marketers should follow: when a disgruntled customer asks for a refund, give it. MyLife.Com, Inc., the owner of a social networking site, didn't do this, and as a result, will now pay a much greater price defending a California class action lawsuit. Here is the cautionary tale, so far:

In mid-2010, John Clerkin began receiving e-mails from MyLife stating that people were searching for him on Clerkin signed up for the website at $21.95 per month but after using the website, Clerkin says "no one he knew was looking for him." He then discovered that he had been charged $155.40, and requested a full refund. However, MyLife refunded only $104.55 and kept the balance. Similarly, in early 2010, Veronica Mendez received a e-mail stating that someone was searching for her. Mendez signed up for a $5.00 trial subscription but was charged $60.00. Like Clerkin, she alleges "that no one she knew was actually searching for her." When she canceled the service and requested a refund, MyLife refused to return any money. Their response was to file a federal class action lawsuit in the Northern District of California.

The charges against MyLife claimed that the e-mails sent to Clerkin and Mendez as a marketing device represented that someone was searching for them, even though no one was. They allege that the website produced "a list of fake names" as searching for those who sign up. To support their allegations, plaintiffs provided a testimonial by an individual who registered on as "sfsf sdgfsdgs." The website then allegedly returned a result claiming seven people were looking for "sfsf sdgfsdgs".

MyLife sought to get the case dismissed, arguing that the plaintiffs received value from the site during the time they subscribed to it. The court did not accept this, or any other of MyLife's central arguments.

Although one of MyLife's executives and one of its investors were dismissed from the lawsuit, the bulk of the claims were sustained by Judge Claudia Wilken, meaning MyLife will now head to costly discovery, and barring a settlement, a likely trial, all of which will be exponentially more expensive than the amount the company could have refunded to Clerkin and Mendez when they first complained.

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