Meal kit services sued over alleged subscription traps
More than 100,000 customers of a popular meal kit delivery provider were allegedly misled and caught in so-called “subscription traps”.
The Australian Competition and Consumer Commission took HelloFresh and Youfoodz, both owned by German-based parent company HelloFresh SE, to the Federal Court in separate cases.
The watchdog alleges that companies that deliver pre-made meal kits to customers’ doors are breaching consumer law by misleadingly advertising that customers can easily cancel their subscriptions online before a certain blackout period.
However, when many consumers tried to cancel their subscription online before the initial delivery disruption, they were still charged and received their first order.
Although they could easily sign up online, consumers were only able to cancel delivery when they spoke to a customer service representative.
This is a clear example of what Deputy Competition Minister Andrew Leigh calls “dark patterns” used by firms to manipulate consumer behaviour.
“We brought these two cases because we alleged that HelloFresh and Youfoodz’s conduct involved a range of confusing and unclear subscription practices that breached Australia’s consumer laws,” said ACCC Commissioner Luke Woodward.
Between January 2023 and March this year, 62,061 HelloFresh customers and 39,408 Youfoodz customers were charged despite canceling their subscriptions before the deadline for the first order.
The ACCC also alleges that HelloFresh requires customers to enter their payment details to view the meals, but that they will not be charged unless they choose a meal from the menu.
But when consumers went to their food selection screen, they unknowingly signed up for an ongoing subscription and were charged for the first delivery.
Many consumers didn’t realize they signed up for a subscription until they received a lunch box or payment notification on their doorstep.
“Merchants should make it clear to consumers when they sign up for a subscription how they can cancel and avoid being charged,” Mr Woodward said.
“Businesses using confusing and complex unsubscribe policies is an issue of significant public concern.”
In one case, a Youfoodz customer allegedly canceled their subscription within minutes of signing up and viewing the menu.
However, they later received a message that they were still charged and the meal kits would be delivered the next day.
Despite numerous calls requesting a refund, they were only offered a 50 percent refund.
The ACCC is seeking compensation for customers, as well as penalties and measures to increase compliance.
HelloFresh has been contacted for comment.
In October, HelloFresh New Zealand was fined NZD845,000 ($735,300) after pleading guilty to misleading consumers about reactivating their subscriptions.
The Albanian government has vowed to put an end to dangerous tactics including subscription traps and drip pricing.
The government will begin consultations on outlawing manipulative tactics in early 2026 before legislating by the end of the year.
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