Counties settle with Dropbox over auto-renew complaint

Counties settle with Dropbox over auto-renew complaint

OAKLAND — Online file sharing company Dropbox will pay $1.6 million in civil penalties and nearly half a million dollars more in restitution to California consumers to settle a consumer protection action filed by several California counties, according to the Alameda and San Francisco district attorneys’ offices.

Alameda, San Francisco, Sonoma and San Diego counties filed the civil action in Alameda County Superior Court against San Francisco-based Dropbox.

Dropbox has a “pro” service and a “business” service, both of which are available on an automatic renewal basis, meaning that the subscription gets renewed without any action by the customer until they cancel. The complaint charged that Dropbox violated California’s Automatic Renewal Law because its Dropbox Pro service did not properly notify customers about its automatic renewal policy in the manner required by law and failed to get consumers’ affirmative consent to the agreement containing those terms. The counties also alleged that the company did not sufficiently advise consumers that the Dropbox for Business service was intended only for organizations or businesses, not individual consumers using it for personal, family or household reasons.

According to a news release from Alameda County District Attorney Nancy O’Malley’s office, $450,000 has been set aside to administer and fund restitution to qualifying California consumers under the court judgement.

Customers may be eligible for restitution if they lived in California and purchased Dropbox Pro between Feb. 24, 2013 and Aug. 1, 2014, and did not use the service for more than 30 days after first paying for it, according to a website set up to help people get restitution.  The settlement  also could cover those who purchased “Dropbox for Business” for personal or household reasons — not for a business or organization — and did not use the service more than 30 days after paying for it, according to the action.

Without admitting liability, the news release said, Dropbox agreed to pay $1.6 million in civil penalties and $100,000 to reimburse the costs of investigation, in addition to the $450,000 set aside for restitution.

Customers have long been frustrated over automatic subscription renewals, often claiming the  automatic renewals take them by surprise or that companies make it difficult to cancel. Other companies, including Hulu and Spotify, have also been hit with lawsuits over auto-renewal policies.

Last year, California passed a bill that requires companies to provide customers who sign up for a free or reduced price offer with notice three to seven days before the first automatic renewal and that they make it easy to cancel.

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Published at Wed, 16 May 2018 15:08:53 +0000