Subscription services face increasing scrutiny from regulators for failing to disclose renewal terms and cancellation policies clearly. In a class action suit, plaintiffs alleged that BarkBox, a reseller of dog treats, toys, and chews that delivers monthly boxes to subscribers, violated California’s Automatic Renewal Law (ARL). Under California law, if consumers are not adequately notified of a renewal policy and do not affirmatively consent to it, additional products received are considered “unconditional gifts.” In these cases, consumers are not responsible for canceling a plan or paying for the goods. How might litigation survey evidence be used by either party?
Case Facts
BarkBox offers subscription plans lasting from one to twelve months and incentivizes customers by offering greater discounts with longer commitments. Subscriptions are sold through the BarkBox website, and the automatic renewal policy appears in gray text at the top of the homepage. On the payment page, buyers must check a box to agree to the terms and conditions of payment, although automatic renewal is not explicitly mentioned in that section.
Amber Farmer, a California consumer, sued BarkBox, alleging that it violated the state’s ARL by failing to disclose subscription terms or properly obtain affirmative consent from customers. According to the complaint, Farmer signed up for what she believed to be a six-month plan but was charged for additional boxes at $25 each and was unable to opt out. The plaintiffs claim that BarkBox’s disclosures and website design constitute false and deceptive advertising.
Consumer Survey Use in False and Deceptive Advertising Class Actions
In class-action filings alleging false or deceptive advertising, consumer survey evidence helps regulators evaluate claims. Depending on the legal arguments, surveys can measure several key issues:
- A false advertising survey could assess consumer perception of the renewal disclosures on BarkBox’s website; specifically, whether they were clear, visible, and sufficient for consumers to provide informed consent.
- A damages survey could evaluate how much consumers would be willing to pay to avoid automatic enrollment, thereby helping to quantify the economic harm they incur.
- A materiality survey could establish whether an allegedly false or misleading advertising statement is material to consumers’ purchasing decisions.
Consumer Surveys and Compliance in Subscription-Based Models
False and deceptive advertising laws, including automatic renewal statutes, are designed to protect consumers from unfair or unclear sales practices. For companies using subscription-based models, ensuring transparent and conspicuous disclosures is essential. Failing to do so can result in regulatory enforcement, class-action litigation, and damage to consumer trust.
IMS Legal Strategies designs and conducts consumer surveys that measure audience understanding of marketing and advertising communications, including online and subscription-based messaging. If you are involved in a false or deceptive advertising dispute or seek to evaluate the clarity of your consumer-facing materials, contact IMS Legal Strategies to learn how survey research can support your case.
