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Weight Loss App Agrees to Pay $56 Million and Make Changes to Enrollment Process to Settle Automatic Renewal Class Action

Weight-loss app Noom has agreed to make substantial changes to its enrollment processes and pay $56 million, in addition to providing $6 million in subscription credits, in order to resolve a federal court case where the plaintiffs alleged that the company utilized deceptive automatic renewal tactics.

In their Fourth Amended Complaint, filed on February 11, 2022, the plaintiffs assert that Noom lured customers in with a promise of a “no strings attached” free trial period. However, as it turns out, if the subscription was not canceled before the trial period ended, it was turned into an automatically renewing subscription, something the plaintiffs allege customers were unaware of. Further, the plaintiffs allege that the trial period was “extraordinarily difficult to cancel.” As such, customers were routinely left to pay “exorbitant multi-month subscription fees” at the conclusion of the trial period. This is due to the fact that Noom imposed lump-sum charges, requiring non-refundable advance payment of up to eight (8) months at the expiration of the “trial” period.

According to the plaintiffs’ allegations, Noom did not allow consumers to cancel their subscription via email, mail, phone, fax, through its website, or by deleting the Noom app from their phone. Rather, the plaintiffs allege that users were required to cancel via their virtual trainer. Further, the plaintiffs allege that the enrollment pathway did not sufficiently disclose the terms of the free trial and subsequent automatic renewal subscription, and that Noom employed certain other “dark patterns” to encourage users to sign up.

In addition to the monetary payments, the settlement would seek to prevent future unintended purchases by class members and the consuming public. Such “programmatic relief” would ensure that automatically renewing subscriptions offered by Noom be entered into only after the receipt of informed affirmative consent, and that the subscriptions may be canceled easily. Specifically, Noom would make a “cancel button” available on each user’s account page, accessible through the website or app. This button and specific method of cancellation would be required to be maintained by Noom for at least two (2) years. In addition, Noom agreed to a separate affirmative opt-in for subscription enrollment, and to use specific enrollment language, such as “[t]his is an autorenewing subscription,” “[i]f I don’t cancel during my [X] day trial, Noom will charge me [X],” and “Noom will charge my payment method on file [X] plus [sales tax] in [sales tax state] sales tax automatically every [X] months thereafter until I cancel.” Furthermore, Noom agreed not to use terms such as “no commitment” and “100% risk free” in connection with the marketing of its subscription-based program. The settlement requires court approval.

Takeaways: This class action suit and significant monetary settlement serves as yet another reminder to subscriber-based marketing programs to ensure compliance with automatic renewal and cancellation laws and regulations. In addition to regulatory action, failure to comply with the various state laws can result in expensive consumer class actions.  Given the growing hodgepodge of statutes, regulations and guidance, marketers should re-examine their enrollment and cancellation processes. 

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