gon consumers may be eligible for restitution under a settlement the Washington State Attorney General’s Office reached with Seattle-based RealNetworks, Inc., an online digital services company that offered subscriptions to games, video and music via free trial offers. The restitution pool, a total of $2 million, is available to consumers nationwide through Aug. 22, 2012.
The lawsuit and settlement filed in King County, Wash., relates to RealNetworks’ use of so-called “free-to-pay conversions,” or negative option marketing, in which free trials result in regular monthly charges unless consumers took quick action. For free trials with a negative option feature, unscrupulous companies take a consumer’s failure to cancel as permission to bill them a recurring monthly payment that is typically difficult to cancel.
Over the last seven years, more than 500 complaints flowed into the Washington Attorney General’s Office and the Better Business Bureau regarding RealNetworks. Consumers spoke of “odd charges” appearing on their credit cards, complaining of bills for monthly subscriptions for premium television, sports or game content that they never ordered.
Oregon passed legislation in 2011 to rein in companies that use negative options by requiring them to obtain consumers’ affirmative consent to the terms of any free offer, including automatic billing provisions.
Under the Washington settlement, RealNetworks agreed to:
• Stop using pre-checked boxes to obtain consent from consumers to purchase products or services;
• Stop offering free-to-pay conversions that do not clearly disclose all the terms of the offer, including subscriptions that are automatically charged on customers’ credit cards;
• Provide an online method of cancelation so that consumers may easily cancel their subscriptions;
• Send e-mail or other reminders that consumers are enrolled in a free-to-pay conversion, along with instructions for how to cancel the subscription;
• Cancel subscriptions within two days of a consumer’s request to do so; and
• Inform consumers who have called to cancel a subscription of additional subscriptions on their account.
The settlement with RealNetworks also provides for a $2 million claims-based pool to provide full restitution for consumers who were victimized between Jan. 1, 2007, and Dec. 31, 2009, the period during which most of the deceptive practices occurred.
The window for making claims expires on Aug. 22, 2012.
Consumers who were unknowingly signed up using pre-checked boxes between January 2007 and December 2009 will receive an e-mail or postcard indicating that they are eligible for a refund. Additionally, consumers may visit realnetworksrestitution.com to submit a claim.
Attorney General John Kroger leads the Oregon Department of Justice. The Department's mission is to fight crime and fraud, protect the environment, improve child welfare, promote a positive business climate, and defend the rights of all Oregonians.