May 24, 2012 at 1:57 PM ETUpdated 7:05 p.m. EDT
Thursday, RealNetworks settled charges of “unfair and deceptive” business practices brought by Washington State Attorney General Rob McKenna.
Under terms of the settlement, RealNetworks did not admit doing anything wrong, but did agree to change its business practices.
It will also pay $2 million in restitution to unhappy customers across the country, and will stop using pre-checked boxes to get people’s permission to make a purchase. Instead, the company is required to comply with the federal Restore Online Shoppers Confidence Act, which requires a customer’s express consent before he or she can be charged for a free trial that converts into a paid subscription.
The state filed the suit in response to complaints like those registered by Seattle attorney Jennifer Horwitz. Horwitz got burned by a free trial offer from RealNetworks several years ago. And she’s still upset with the way she was treated.
“I thought it was a complete outrage,” she said.
Horwitz agreed to try the Seattle-based company’s Rhapsody Unlimited music service “free for 14 days.” She canceled before the two-week trial period ended. But RealNetworks charged her for other subscription services that were bundled with the Rhapsody offer.
“These were services I didn’t know I had, I didn’t know they were part of the free trial, and I wasn’t using them,” Horwitz told me.
She called RealNetworks to complain and was told she hadn’t canceled the other subscriptions when she canceled the Rhapsody trial offer.
“I couldn’t believe it,” she recalled. “They expected me to say, ‘Oh and I want to cancel these other things that I didn’t even know were bundled with the service.’ It was crazy.”
Horwitz made call after call asking for a refund. She said RealNetwork’s customer service agents only agreed to return her money when she threatened to sue.
Many other unhappy customers were not as lucky.
“People were charged for months – sometimes years – paying hundreds of dollars for subscriptions they knew nothing about,” said McKenna. “It’s disappointing to see any company, much less a well-established company,engaging in this kind of deceptive marketing practice.”
The state’s lawsuit claims the company’s “free trial” offers used deceptive pre-checked boxes and fine print – that many people did not notice – to obligate them to other subscriptions they did not want.
“It really takes advantage of people’s being in a hurry, not scrolling all the way down to the bottom of the page, not noticing a little box which was already checked off next to all the fine print,” AG McKenna told me.
RealNetworks' new CEO Thomas Neilsen said Thursday the company "disagrees" with the attorney general's complaint, but added, "We do acknowledge some aspects of RealNetworks' e-commerce practices were not what our customers expected of us." He promised to do better in the future and said the practices in question — such as those pre-checked boxes — were stopped years ago.
Anyone who unknowingly signed up for a paid subscription service from RealNetworks using pre-checked boxes between January 2007 and December 2009 will receive a postcard indicating that they are eligible for a refund. Or visit realnetworksrestitution.com to submit a claim.
My two cents
I’ve warned you about “free trial” or “risk free” offers many times before. They’re designed to make you think you’re getting something for nothing. But as in this case – if you’re required to hand over your credit or debit card number, for whatever reason, you could be in for a nasty surprise.
Before you take the bait, ask yourself – is it really worth the potential hassle? If you decide it is, read everything before you sign up. If it’s an online offer, read everything on the page and the links to terms and conditions. Look for pre-checked boxes. Keep a copy of everything in your files.
Is it worth the hassle? You know what I think.