HelloFresh New Zealand has been penalised $845,000 for misleading customers.
The company acknowledged that it reactivated cancelled subscriptions by offering vouchers via cold calls without providing clear explanations.
Between February 2022 and July 2023, an 18-month campaign targeted former HelloFresh customers by calling them and offering discount vouchers to encourage reactivation of their lapsed memberships.
In numerous instances, the calls failed to clearly explain that accepting the offer would automatically renew their subscription and trigger payments.
A total fine of $845,000 was imposed on the company, with $169,000 allocated to each of the five charges.
The Commerce Commission prosecuted the company on five charges under the Fair Trading Act. When the case was filed in the Wellington District Court, the Commission emphasised the issue of “subscription traps,” where consumers are misled into continuing payments, highlighting it as a priority for enforcement.
According to Commerce Commission lawyer Danielle Houghton, the HelloFresh campaign involved making 1.2 million calls, of which 300,000 were answered, ultimately affecting about 77,000 customers.
The Commerce Commission received 424 complaints related to this conduct.
“Consumers did not appreciate and did not consent to their subscriptions being reactivated,” Houghton said.
“There is an inherent dishonesty in signing consumers up for a service they have not agreed to acquire.”
Houghton pointed out that cancelling the reactivated subscription involved a complicated multi-step process online, with very limited online support available, which “seriously aggravated the harm” experienced by affected customers.
The lawyer for HelloFresh, Peter Hunt, stated today that call centre staff may have exceeded their authority but emphasised that customers received refunds and there was no evidence of long-term or consistent harm.
“Refunds were readily given,” Hunt added.
Tom Rutledge, CEO of HelloFresh Australia and New Zealand, responded to the company’s sentencing with an “unreserved” apology to customers.
“HelloFresh New Zealand accepts today’s sentencing decision from the Auckland District Court relating to historical breaches of the Fair Trading Act 1986,” he said.
“We unreservedly apologise to our customers, partners, employees and the wider community for the shortcomings in our past customer service practices.”
Rutledge also acknowledged that the events central to the case took place between November 2022 and June 2023.
“We take full responsibility for them. At the time, some customers were misled by third-party and in-house call centre processes that fell well short of our standards.”
“Since mid-2023, HelloFresh New Zealand has put measures in place to prevent this from happening again.”
“We ceased using the third-party call centre in question, introduced centralised complaint tracking, and made changes to make cancelling an easier process online or in app, as well as solidifying our flexible subscription model with pause/skip functionality, mandatory quality audits, and strengthened compliance monitoring.”
“Customers who were affected received refunds or credits, and we deeply regret the frustration caused.”