Angie’s List, a well-known Internet site that provides its members with forums to post and access reviews about local service providers, engaged in fraudulent and deceptive conduct and breached its membership agreements by automatically renewing members’ subscriptions at higher prices than those for which they contracted, a new class action suit claims.
The suit filed in federal court in Indiana alleges that despite Angie’s List’s commitment to “placing the interests of the consumer first,” the site charged one membership fee for new members and a distinct, higher renewal fee for renewing members.
The higher “Membership Renewal Fee” is not mentioned on Angie’s List’s Web site, nor is it referenced in the FAQ regarding membership fees. Thus, Angie’s List “conceals from prospective members all information regarding the Membership Renewal Fee,” according to the complaint.
The suit estimates that Angie’s List fraudulently renewed memberships over one million times.
The complaint also alleges that Angie’s List breached its membership agreements by unilaterally changing its business model. Specifically, in 2010, Angie’s List modified its business model in 30 of its local markets to create multiple subscription options for contractor services, automotive repair, and medical services. Under the new model members have the choice to subscribe to individual lists, a “bundled” option of all three or choose among the service options. Angie’s list did not inform them of the three options. Instead, Angie’s List renewed existing members for the “bundled” option, charging them for all three of the service plans, contrary to the language of the membership agreement which permitted Angie’s List to automatically renew members only in the membership plan in which they had previously enrolled.
The suit seeks to certify two national classes: one for all members who were renewed at a higher rate and a subclass of those who were renewed after the 2010 change and charged for the “bundled” option. Both groups seek treble damages as well as costs and attorneys’ fees.
To read the complaint in Fritzinger v. Angie’s List, click here.
Why it matters: Companies that offer automatic renewals have faced regulatory and class action scrutiny in recent years and must be sure to clearly and conspicuously disclose all material terms of their programs.