Noom Inc reached a settlement with FTC, accusing the app provider of tricking customers into signing up for "risk-free" trial periods only to force them into automatic and costly renewals that were difficult to cancel.
Noom, a popular weight-loss program, highlights several deceptive business practices that have been used to lure customers and keep them locked in costly auto-recurring plans. Noom relied on the forced continuity model which involves offering customers a low-cost or zero-cost trial period that is difficult to cancel and ultimately leads to customers being trapped in expensive, long-term contracts. In addition, Noom uses the hard to cancel pattern, which makes it easy for customers to sign up for the program but extremely difficult to cancel.
Noom's business model is built around the use of renewal schemes that offer customers enticing promises of low-cost or zero-cost trial periods. However, these trial periods are designed to be difficult to cancel, and customers often find themselves trapped in costly, long-term contracts that they never intended to enroll in. This is achieved through a combination of misleading advertising and ambiguous terms and conditions that make it difficult for customers to understand the true cost and duration of the program.
Noom lures customers into its program is by offering a purportedly "risk-free" two-week trial period that is either free or offered at a low cost ranging from $1.00 to $18.37. However, after capturing customers' payment information, Noom immediately activates its auto-renewal program and begins assessing non-refundable membership fees. These fees often start with a lump-sum non-refundable advance payment for as many as six months at a time, costing as much as $199.00. Noom's business practices particularly deceptive as the company fails to obtain explicit consent from customers before enrolling them in the automatic renewal program.
Noom Inc agreed to a $62 million settlement in a lawsuit that alleged tricking customers into signing up for "risk-free" trial periods only to force them into automatic, costly renewals that were difficult to cancel. The settlement involves a $56 million cash payment and $6 million in subscription credits to be offered.
Geraldine Mahood (Individually and on Behalf of All Others Similarly Situated) and Noom, Inc.
Related deceptive patterns
The hidden subscription deceptive pattern typically works by employing some form of sneaking or misdirection. Users think they are buying one thing, when in fact there's a hidden legal stipulation that they are in fact signing up to a recurring subscription. Once they have signed up, the service is usually covert and the user is sent no emails or notifications reminding them that they are paying on a recurring basis, so that payments continue for as long as possible. It is also typically paired up with the hard to cancel deceptive pattern.
Hard to cancel (aka "Roach Motel") is a deceptive pattern where it is easy to sign up for a service or subscription, but very difficult to cancel it. This typically involves hiding the cancellation option, requiring users to call customer services to cancel, and making the cancellation process overly complex and time-consuming. This can cause users to give up trying to cancel, and continue paying for the service for a longer period.
Prohibits the dissemination of any false or misleading statements in advertising.
Provides consumers with a private cause of action for relief from deceptive or unlawful practices in transactions for goods or services.
Prohibits unfair and unlawful business practices that deceive or mislead consumers in California.
Prohibits deceptive acts and practices in business or service, allows AG action against violators, and private right of action for injured individuals with increased damages for willful violations.