Photo courtesy: Business List NZ
The Commerce Commission has issued a significant warning to Kogan Australia Pty Limited, also known as Dick Smith, regarding practices that may mislead consumers. This warning stems from the company’s website automatically enrolling customers in a $149 membership subscription called “FIRST” without their consent.
Vanessa Horne, the General Manager for Competition, Fair Trading, and Credit at the Commerce Commission, said consumers typically focus on their intended purchases when shopping online. They should not be burdened with the risk of being automatically signed up for subscriptions through pre-selected tick boxes.
Horne emphasised that businesses have a legal obligation under the Fair Trading Act to avoid misleading consumers, including those shopping online.
“The pre-selection of the “FIRST” membership was not obvious on Dick Smith’s website, which meant it was unclear to consumers that they were signing up to a subscription,” Horne said.
“To avoid automatically subscribing, a customer would have to first recognise the tick box had been selected, which meant they were signed up, and then actively de-select the option.”
From July 3 to September 19, 2023, Dick Smith’s website utilised a pre-selected tick box that added a trial for the FIRST membership to shoppers’ carts by default. This practice meant that many customers unknowingly agreed to a 14-day free trial, which subsequently transitioned into an ongoing payment obligation of either $149 annually or $14.99 monthly once the trial period ended.
The automatic sign-up process was not clearly communicated on Dick Smith’s website, leading to confusion among consumers about their subscription status. Most complainants only realised they had been signed up when they saw the charge on their accounts after the trial period.
Following these complaints and the Commission’s intervention, Dick Smith ceased using pre-selected fields for subscriptions and adopted a method requiring explicit customer consent to sign up for the FIRST program. Additionally, the company has offered refunds to those who requested them.