More than 100,000 customers of a popular meal-kit delivery provider were allegedly misled and caught in so-called "subscription traps".
The Australian Competition & Consumer Commission has taken HelloFresh and Youfoodz, both owned by German-based parent company HelloFresh SE, to the Federal Court in separate proceedings.
The watchdog alleges the companies, which deliver pre-prepared meal kits to customers' doors, breached consumer law by misleadingly advertising that customers could easily cancel subscriptions online before a specified cut-off time.
But when many consumers tried to cancel their subscription online prior to the first delivery cut-off, they were still charged and received their first order.
Despite being able to sign up easily online, consumers were only able to cancel the delivery if they spoke with a customer service representative.
It is an apparent example of what Assistant Minister for Competition Andrew Leigh has called "dark patterns" that firms use to manipulate consumer behaviour.
"We’ve brought these two cases because we allege that HelloFresh’s and Youfoodz’s conduct involved a suite of confusing and unclear subscription practices in breach Australia’s consumer laws," ACCC Commissioner Luke Woodward said.
Between January 2023 and March this year, 62,061 HelloFresh customers and 39,408 Youfoodz customers were charged a fee despite cancelling their subscription before the specified cut-off time for the first order.
The ACCC also alleges HelloFresh required customers to enter their payment details in order to view meals but represented they would not be charged unless they selected meals from the menu.
But when consumers progressed to meal selection screens, they unknowingly signed up to an ongoing subscription and charged for the first delivery.
Many consumers were not aware they had signed up for a subscription until the meal box arrived on their doorstop or they received a payment notification.
"Traders must clearly communicate when consumers are signing up for a subscription, as well as how they are able to cancel and avoid being charged," Mr Woodward said.
"Businesses using confusing and complicated subscription cancellation policies is a matter of significant public concern."
In one case, a Youfoodz customer allegedly cancelled their subscription within minutes of signing up and viewing the menu.
But they later received a text that they had been charged nonetheless and their meal kit would be delivered the next day.
Despite multiple calls requesting a refund, they were only offered a 50 per cent refund.
The ACCC is seeking compensation for customers, as well as penalties and measures to boost compliance.
HelloFresh has been contacted for comment.
In October, HelloFresh New Zealand was fined $NZ845,000 ($A735,300) after pleading guilty for misleading consumers into reactivating their subscriptions.
The Albanese government has vowed to put an end to dodgy tactics, including subscription traps and drip pricing.
The government will commence consultation on outlawing the manipulative tactics in early 2026 before introducing legislation by the end of the year.
