On October 23, a coalition of 33 state attorneys general announced a multistate settlement with an online retailer resolving claims of deceptive advertising and billing practices related to its “VIP Membership Program.” The agreement provides for automatic refunds to eligible consumers, valued at approximately $3.8 million and $1 million in payments to the participating states for investigative costs and future consumer protection efforts, to be divided among the states.

The attorneys general alleged the retailer: (i) misled consumers by misrepresenting product pricing on its website; (ii) enrolled customers in recurring monthly charges for a membership program without obtaining clear consent; (iii) used cancellation procedures that made it difficult for consumers to end their memberships; and (iv) failed to disclose material facts to consumers such that it was unclear that consumers would be automatically enrolled in its membership by purchasing products. The attorneys general alleged that the retailer’s conduct constituted unfair or deceptive practices in violation of relevant state consumer protection laws.

Eligible consumers who enrolled prior to May 31, 2016, and made only an initial purchase without subsequent activity would receive automatic restitution under the agreement. The agreement further provided that consumers with unresolved complaints, or those who submitted new eligible complaints within 90 days of the settlement’s effective date, may be entitled to additional restitution. Among other things, the retailer must also improve the transparency of its membership terms, obtain express informed consent before enrollment, provide a simple online cancellation process, and promptly process cancellation requests going forward.