HelloFresh agrees to $7.5M settlement in California lawsuit accusing it of misleading customers

Meal kit delivery firm HelloFresh will pay $7.5 million to settle a lawsuit accusing it of misleading customers and making it difficult for them to cancel their subscriptions.

In joint statements from the district attorney's offices of Los Angeles and Santa Clara counties, which co-led the lawsuit, prosecutors said HelloFresh violated California's Automatic Renewal Law by deceptively enrolling consumers into auto-renewing subscription plans without proper disclosure or consent.  

The lawsuit also said HelloFresh violated the state's False Advertising Law by failing to disclose the terms and conditions of advertised free meals, surprise gifts, and free shipping offers, among other false and misleading advertising allegations. The practices allegedly resulted in consumers being unknowingly enrolled in ongoing payment plans that were hard to cancel, the lawsuit alleged.  

HelloFresh, based in Germany, is the largest meal kit delivery company in the U.S. with an approximate 75% market share.

"No company, no matter how big or well-known, is exempt from California's consumer protection laws," Los Angeles County District Attorney Nathan J. Hochman said in a prepared statement. "We will aggressively pursue enforcement when businesses take advantage of consumers by failing to clearly disclose subscription terms, obtain proper consent, or provide a fair way to cancel. Consumers have a right to know what they're signing up for, and they deserve better. Digital deception is still deception under the law."  

"Misleading automatic renewal subscriptions and false advertising practices don't sell products - they sell deception," said District Attorney Jeff Rosen in a prepared statement. "Stop means stop."

The complaint was filed in Santa Clara County Superior Court, and the settlement was approved on Thursday. HelloFresh will pay $6.38 million in civil penalties, $120,000 in investigative costs, and $1 million in restitution to eligible California consumers. 

In a statement to CBS News Bay Area, a HelloFresh spokesperson said,

"We take our commitment to customer transparency very seriously, and our subscription model and cancellation policies have been consistently clear to customers throughout the whole customer journey. While we deny any wrongdoing, we have cooperated fully with the coalition of California District Attorneys and have entered into a settlement agreement with them to resolve the matter amicably."

HelloFresh customers who are eligible to take part in the restitution fund include those who were:

• enrolled in an automatic renewal product subscription between January 1, 2019, through August 18, 2025
• charged for the first shipment without their knowledge or consent
• cancelled their automatic renewal product subscription after the first shipment, and never received a refund from HelloFresh. 

A third-party claims administrator will send notices to eligible consumers to verify their claims and distribute the shared restitution fund proportionally, prosecutors said.

Prosectors in the lawsuit also included the district attorney's offices of San Diego, Santa Barbara, and Santa Cruz counties, as well as the Santa Monica City Attorney's Office. Those offices, along with those of Santa Clara and Los Angeles counties, comprise the California Automatic Renewal Task Force, established in 2015 to address rising consumer complaints about subscription-based traps. 

The DA's office will split the $6.38 million in civil penalties to be used to support future enforcement of consumer protection laws, prosecutors said.