NY AG Gets Serious Over Cancellation Practices
Last month, the New York AG filed a lawsuit against Sirius XM Radio, alleging that the company “sells subscriptions that are easy to purchase, and extremely difficult to cancel.” Consumers who want to cancel their subscriptions are forced to “undergo a lengthy and burdensome endurance contest that Sirius created and implemented as a strategy for keeping as many consumers from cancelling as possible.”
In some cases, the alleged endurance contest required consumers to call or chat with sales agents who are trained to engage in a six-part script designed to convince customers not to cancel. Agents are instructed to “think of every ‘No’ simply as a request for more information,” to ask questions, and to pitch other offers. Many consumers complained that the cancellation process was time-consuming and frustrating.
The complaint alleges that Sirius violates New York’s automatic renewal law, which requires companies to implement a “cost-effective, timely, and easy-to-use mechanism for cancellation, ” the state’s general deceptive act and practices laws, and that a violation of the federal Restore Online Shoppers’ Confidence Act (or “ROSCA”) is a violation of their general statute. The AG seeks restitution and damages for aggrieved customers and disgorgement of all profits related to the alleged deceptive practices. It’s worth noting the NYAG obtained a $740,000 settlement including restitution stemming from a mental health provider Cerebral’s cancellation processes just a week after the Sirius suit.
As we’ve posted before (and highlighted in our year-end update), states are very focused on automatic renewals and cancellations, and dark patterns, so this lawsuit isn’t a surprise. Here are a few additional observations, though:
- The lawsuit was prompted, in part, by “voluminous affidavits and complaints submitted to the NYAG and other agencies.” Companies should pay attention to consumer complaints before regulators do.
- We’ve focused a lot on ensuring that public-facing materials comply with automatic renewal laws, but the AG’s review of training materials and scripts is a good reminder for companies to review those materials for red flags, and to promptly address if they discover issues of concern.
- The AG carefully scrutinized data on wait times on how long it took consumers to cancel. You should do the same. As more states require companies to implement easy cancellation processes, we expect that states will focus on how long it takes people to cancel.
If you haven’t examined your automatic renewal practices lately, you may want to consider making that one of your new year’s resolutions.