A DIET SUPPLEMENT COMPANY has agreed to pay nearly a million dollars in a court-ordered judgment entered this week arising from the enforcement of the California Automatic Renewal Law and False Advertising Law, the Santa Cruz County District Attorney’s Office announced last week.
American Behavioral Research Institute LLC, maker of the sleep supplement Relaxium, agreed to pay at least $925,000 in civil penalties and costs, as well as make restitution specifically to California consumers through a class action case already arranged, the district attorney’s office said on Sept. 5.
An investigation by the California Auto Renewal Task Force, which is composed of district and city attorneys’ offices across the state, found that the company did not properly disclose to its customers that their subscriptions would be automatically renewed after a trial period.
Under California law, online businesses must clearly and conspicuously disclose all automatic renewal charges, terms of sale and get affirmative consent to those recurring charges from the consumer.
The lawsuit filed in Santa Cruz County Superior Court by the joint taskforce of prosecutors reached a stipulated resolution against the out-of-state company that imposes an injunction and assesses $925,000 in civil penalties and costs. It also orders restitution specifically to California consumers through a class action case already arranged.
“Automatically renewing charges that are not disclosed is an industry practice that deceives consumers out of millions of dollars.”Santa Cruz County District Attorney Jeffrey Rosell
American Behavioral Research Institute cooperated in this resolution and agreed to changing its misleading advertising disclosures in its advertisements, product packaging and website.
“Automatically renewing charges that are not disclosed is an industry practice that deceives consumers out of millions of dollars,” Santa Cruz County District Attorney Jeffrey Rosell said in a statement Tuesday.
The Automatic Renewal Law is designed to prevent companies from automatically renewing subscriptions without the consumer’s knowledge. The False Advertising Law is designed to prevent companies from making unsupported claims about their products.
The District Attorney Offices of Santa Cruz County, Los Angeles County and Santa Barbara County, were leads on the case for the California Automatic Renewal Task Force or CART, which also includes District Attorney Offices from San Diego, Santa Clara and the City Attorney of Santa Monica.
The CART primarily investigates businesses for violations of the California Automatic Renewal Law and federal statutes regulating automatic renewal contracts. However, when appropriate it investigates other law violations in conjunction with Automatic Renewal Law violations.