HelloFresh New Zealand has been fined $845,000 for tricking consumers into renewing their subscriptions.
The penalty follows criminal charges laid by the Commerce Commission against the company over its breach of the Fair Trading Act. The regulator previously investigated HelloFresh’s conduct between February 2022 and July 2023.
The company already pleaded guilty to misleading consumers into reactivating their subscriptions to the food delivery service without their express knowledge or consent. Such conduct is often referred to as a subscription trap.
According to Commerce Commission deputy chair Anne Callinan, HelloFresh’s strategy was centred around cold calling former customers, which it described as gathering customer feedback.
The primary purpose of these calls, however, was an attempt to reactivate customers by offering discount vouchers without making it clear that, if accepted, they could lead to the customers’ paid subscription being reactivated.
The company made over 1 million calls to former customers and managed to reactivate almost 80,000 customers’ subscriptions over 18 months. The commission later received a high number of complaints from affected customers.
“After listening to a sample of call recordings, it’s clear that agents glossed over or ignored customers, who on numerous occasions clearly stated they did not want to restart their subscription,” said Callinan.
“We found that this misleading practice was embedded in HelloFresh’s business processes – this was not a one-off issue.”
Callinan added: “This case should send a strong message to those who offer subscription-based services – you need to be transparent about your terms and ensure customers are giving informed consent when signing up to your service.”
The Commerce Commission says it will continue to address any misleading online sales conduct, including subscription traps, as this is one of the regulator’s enforcement priorities.
HelloFresh New Zealand is a subsidiary of Berlin-based HelloFresh SE, one of the world’s largest meal-kit providers with operations across 18 countries.
