California-based fitness brand Beachbody has agreed to change its sales practices—and to pay $2.6 million in penalties as well as $1 million in restitution to local health advocacy groups—under a final judgment by Judge Mitchell Beckloff of the Santa Monica Superior Court.
The complaint against the distributor of exercise videos, dietary supplements and weight-loss programs in Case No. SS029222 was lodged after an undercover two-year investigation found that the company was applying recurring charges to customer accounts without their legal consent, according to a report by Westside Today. Indeed, customers complained that Beachbody charged their credit cards automatically for subscriptions after so-called free trials, as well as for account renewals.
Automatic renewals represent a highly profitable scam—frequently used by dishonest magazine subscription agencies and facial care companies—because consumers often aren’t aware of the credit card reorders or forget to cancel them after a free trial.
Judge Beckloff ruled that, effective immediately, Beachbody would have to “clearly and conspicuously” disclose renewal terms, obtain consent from consumers via a separate checkbox, allow customers to cancel easily (both online and by phone), and send reminders of upcoming renewals for all subscriptions of six months or longer.
Beachbody, which claims to serve 23 million customers worldwide with programs such as the popular P90X at-home streaming workout, said it has already invested in enhancing its digital platforms for customers and “welcomed” the order to make changes to its business.
“Customers can and should expect a transparent purchase process with us, one that clearly lets them know exactly what they are buying and when,” Jon Congdon, president and CMO of Beachbody, said in a company statement.
The Santa Monica City Attorney’s Office told the LA Times that the judgment represented a win for consumers. “The Santa Monica city attorney’s office is committed to protecting consumers from unfair and unlawful business practices,” said Santa Monica City Attorney Lane Dilg. “This is an important victory to ensure that consumers will not be subject to recurring charges imposed without their clear approval and consent.”
Dilg said his office believes that the injunction involving Beachbody is the first in California requiring a separate online checkbox to ensure customers know they’re signing up for a product or service with automatic renewals.
According to the LA Times, the city will also require Beachbody to provide well-accepted scientific studies to back its health claims. Prosecutors alleged that the company had made false or misleading claims about dietary supplements aimed at fighting aging, inflammation and mental decline.