In what the government called the first major prosecution of an online business for violations of California’s automatic renewal law, MyLife.com has agreed to pay more than $1 million to the Santa Monica City Attorney.
The social media site tricked consumers into providing their personal identifying information by falsely advertising that other site users were searching for them in the “Who’s Searching for You” feature, according to the City Attorney. MyLife promised that by sharing information consumers could learn who was searching for them at no cost. In reality, the consumer had to pay for the service, the government said. To better entice consumers, the site made use of blurry photos of people who were allegedly searching for consumers when they were not.
MyLife also advertised a low monthly rate for joining the site, but charged consumers for an entire year of membership and then continued to charge users’ credit cards each year automatically without notice and without getting affirmative consent as required by law.
Pursuant to the settlement agreement, MyLife is prohibited from falsely advertising its services and from making unauthorized credit card charges. The site must provide consumers with clear notice and receive explicit consent prior to charging consumers’ cards under an automatic renewal program. MyLife can accept payment only for membership lasting longer than one month if all terms of the deal are displayed clearly and conspicuously in close proximity to the payment button.
MyLife is also prohibited from promising any free service and then charging consumers money, and from ignoring consumer requests to cancel their memberships. Additionally, the social media site is permitted to show pictures of people to entice consumers into signing up only if the photos actually depict the people who are pictured.
Finally, the company must pay $800,000 in penalties to the Santa Monica City Attorney’s Office, and $250,000 for consumer refunds.
Why it matters: This is not the first time that MyLife has gotten into trouble for its misleading advertising tactics. The company originally came under scrutiny for its content scraping (i.e., sending automated emails to address book contacts of anyone who signed up for the service). More importantly, this case also serves as a reminder that states (as well as the FTC) do not hesitate to enforce automatic renewal laws. California’s automatic renewal law mandates that all companies clearly and conspicuously disclose all terms of any auto renewal program and obtain explicit consent from consumers before they can automatically renew credit card payments. “Consumers online should be extremely careful with two things: their personal information and their credit cards,” Santa Monica’s Chief Deputy of Consumer Protection Adam Radinsky said in a statement about the MyLife action. “Consumers should be especially alert to automatic renewals whenever they make an online payment for any service or membership.”
