Ore. AG announces eligibility for Wash. RealNetworks settlement

Bryan Cohen Jun. 18, 2012, 7:41am


SALEM, Ore. (Legal Newsline) -- Oregon Attorney General John Kroger says Oregon consumers may be eligible for restitution as part of a Washington state settlement with RealNetworks Inc.

The settlement with the Seattle-based RealNetworks Inc., an online digital services company that offered subscriptions to music, video and games via free trial offers, provides a restitution pool of $2 million for consumers through Aug. 22.

The lawsuit and settlement, which was announced Thursday, relate to the company's alleged use of free-to-pay conversions, also known as negative option marketing, in which free trials resulted in monthly charges if consumer failed to take quick action.

In free trials with a negative option feature, companies take a consumer's failure to cancel as permission to bill them monthly, which is often hard to cancel.

RealNetworks was the subject of more than 500 complaints to the office of Washington Attorney General Rob McKenna and the Better Business Bureau. Consumers alleged that strange charges appeared on their credit cards and that they received bills for monthly television, sports or game subscriptions that they didn't order.

Under the terms of the settlement in Washington, RealNetworks will inform consumers who have called to cancel a subscription of additional subscriptions on their account, cancel subscriptions within two days of a request by a consumer to do so, send e-mail or other reminders that consumers are enrolled in a free-to-pay conversion with instructions for how to cancel, provide an online cancellation method so consumers can easily cancel and stop using pre-checked boxes to get consent from consumers for the purchase of services or products.

The settlement provides a $2 million claims-based pool to provide full restitution for consumers who were victims of an unknown subscription between Jan. 1, 2007, and Dec. 31, 2009.

In 2011, Oregon passed legislation to limit the ability of companies to use negative options by requiring them to get the affirmative consent of consumers to the terms of any free offer such as automatic billing provisions.

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