McKenna, RealNetworks reach $2.4M settlement

Bryan Cohen May 24, 2012, 4:13pm


SEATTLE (Legal Newsline) - Washington Attorney General Rob McKenna announced a $2.4 million settlement on Thursday with a Seattle-based digital media provider for allegedly violating the state's Consumer Protection Act.

McKenna's office and the Better Business Bureau received more than 500 complaints about RealNetworks Inc. over the last seven years. Consumers alleged they received strange charges on their credit cards and bills for monthly subscriptions for premium sports, television or game content they never ordered.

"Deceptive pre-checked boxes and fine print obligated consumers to not-so-free trials for subscription services they didn't want in the first place," McKenna said. "People were charged for months - sometimes years - paying hundreds of dollars for subscriptions they knew nothing about."

The lawsuit and settlement filed on Thursday in King County Superior Court seeks to end alleged deceptive and unfair practices by RealNetworks, including free-to-pay conversions in which free trials quickly turn into monthly charges unless consumers take fast action, McKenna said.

McKenna's office also alleged that consumers found it difficult to get RealNetworks to stop the charges and were pitched additional free trials when calling to cancel. In addition, consumers were allegedly refused refunds even when canceling the service prior to the expiration of the free trial.

Under the terms of the settlement, RealNetworks will provide consumers nationwide with restitution, comply with the federal Restore Online Shoppers Confidence Act by requiring a customer's express consent before being charged for a free trial that converts into a paid subscription, stop using pre-checked boxes to obtain consent from consumers to buy services or products, stop offering free-to-pay conversions that do not disclose all offer terms, including automatically charged subscriptions, provide an online cancellation method, send emails or other reminders that consumers are enrolled in a free-to-pay conversion with instructions on how to cancel, cancel subscriptions within two days of a consumer request and inform consumers who have called to cancel a subscription of other subscriptions on their account.

The settlement provides a $2 million claims-based pool to give full restitution to consumers who were victimized during the three year period before December 2009 when the alleged practices were most common. Consumers who unknowingly signed up using pre-checked boxes from January 2007 to December 2009 will receive a postcard indicating they are eligible for a refund.

RealNetworks will also pay $400,000 in attorneys' fees.

"The company has voluntarily made numerous changes since December 2009 to curb the practices that are at issue in the lawsuit and this, thankfully, has resulted in fewer recent complaints to our office," McKenna said.

McKenna's office previously brought a case regarding unauthorized charges by Intelius, an online merchant, but this is the first time a defendant in a state action was forced to comply with the Restore Online Shoppers Confidence Act.

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