Antitrust Law Daily Wrap Up, ADVERTISING—W.D. Wash.: Amazon and Audible can’t escape class action over auto-enrollment, (Jan 10, 2025)

By Donielle Tigay Stutland, J.D.

Washington court denies Amazon’s motion to dismiss suit over Audible membership auto-enrollment.

A federal district court in Washington denied a motion by Amazon.com, Inc. and Audible, Inc. to dismiss a class action lawsuit brought by a consumer alleging that the online retailer had auto-enrolled her in a subscription to Audible’s audio book program without her knowledge in violation of California consumer laws. The court concluded that the consumer had plausibly alleged violations of California’s Consumers Legal Remedies Act (CLRA) and (2) California’s Unfair Competition Law and denied the motion to dismiss (Heck v. Amazon.Com, Inc., No. 2:23-cv-01219-JHC (W.D. Wash. Jan. 8, 2025)).

Background. The named plaintiff is a member of the Amazon Prime program. The complaint highlighted that “One of the benefits of Prime Membership is free 2-day shipping on many items.” Amazon also offers Prime members “FREE No-Rush Shipping.” If a Prime member selects the No-Rush Shipping option, they can “receive a reward toward e-books, digital movies, and music.” The named plaintiff alleged that Amazon offered its Prime members “a digital reward” in exchange for choosing “FREE No-Rush Shipping.” But when the Prime member redeemed the “digital reward,” the complaint alleged that Amazon sent the member’s personal information, including payment information, to Audible, who enrolled them in a 30-day trial membership that, without affirmative cancellation, automatically became a paid membership with a monthly fee.

The plaintiff alleged that she “was never informed that by using what she thought was a ‘digital reward’ by selecting the ‘FREE No-Rush Shipping’ option on her Amazon Prime purchases, that she would be enrolled in an Audible membership.” She further alleged that before and after she was enrolled in the Audible subscription, she did not receive any emails or other written communications from Amazon informing her “of the terms of any offer for a subscription to Audible, the cancellation policy, or information regarding how to cancel the subscription.” The customer alleged that she was billed for multiple months of an Audible subscription without her knowledge.

The class action alleged that Amazon and Audible violated (1) California’s Consumers Legal Remedies Act (CLRA), California Civil Code § 1750, et seq.; and (2) California’s Unfair Competition Law (UCL), California Business and Professions Code § 17200, et seq. Id. Amazon filed a motion dismiss, contending that the complaint fails to state a claim upon which relief can be granted.

CLRA Notice. The court first analyzed Amazon’s contention that the plaintiff failed to satisfy Section 1782(a) of the CLRA, which requires that a plaintiff provide notice “thirty days or more prior to the commencement of an action for damages. This was the plaintiff’s third complaint and it was noted that the first complaint was dismissed in part due to a lack of notice. However, following that, on January 29, 2024, the plaintiff had sent a new CLRA notice letter to defendants’ counsel who accepted service on behalf of defendants.

The court indicated that the notice letter contains the very same language as the complaint about the Audible membership enrollment. Thus, the court determined that the consumer provided Amazon with sufficient notice of the alleged CLRA violations, prior to her amending and filing her new complaint.

Plausibility of CLRA Claim. Amazon next argued that the plaintiff failed to state a CLRA claim because (1) “the TAC does not identify any conduct by Defendants... that purportedly deceived” Heck; and (2) the TAC “does not allege reliance on any misrepresentation or omission, or causation of damages.” The court laid out that in order “To state a claim under the CLRA, a plaintiff generally must allege a misrepresentation, reliance, and damages.”

Amazon asserted that the consumer alleged no misrepresentation because she “identifies no misrepresentation or failure to disclose about No-Rush Shipping, the purported rewards, or her enrollment in Audible.” The court disagreed and indicated that she did not need to state “the what or how of the conduct” that led to her purported enrollment in Audible. The customer alleged that when she redeemed purported “digital rewards” that Amazon offered in exchange for “FREE No-Rush Shipping,” Amazon passed her information to Audible who then enrolled her in a 30-day free trial membership that automatically converted into a paid membership.

The court also determined that the consumer pleaded reliance by alleging that she would not have chosen No-Rush Shipping if she had known that she would be enrolled in an Audible subscription. She also alleged that had Amazon informed her “in a clear and conspicuous manner” that she would be enrolled in an Audible membership after using the purported “digital rewards” she had received by choosing No-Rush Shipping for her Prime purchases, she would have either “1) not selected the ‘FREE No-Rush Shipping’ option or used what she thought were the ‘digital rewards’; and/or 2) taken steps to cancel the Audible membership before she was charged for it.”

The court concluded that the complaint adequately alleged reliance and causation of damages for purposes of her CLRA claim.

Plausibility of UCL Claim. The court next turned to Amazon’s contention that the customer failed to plead a plausible UCL claim, arguing that the customer’s UCL claims fail because she “does not allege what conduct supposedly deceived her or how that unidentified conduct caused her Audible enrollment.” The court also rejected this argument.

The court determined that the customer stated unlawful conduct claims under the UCL based on alleged violations of Sections 17602(a)(1) and 17602(a)(2) of the California Auto Renewal Law (ARL). In her complaint, the consumer alleged that she had not been provided with “‘clear and conspicuous notice that she had been enrolled in an Audible membership’ because she never saw any offer or terms from either Amazon or Audible.” Under the requirements of the ARL: (1) a business must “present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled”; (2) a business may not “[c]harge the consumer’s credit or debit card, or the consumer’s account with a third party, for an automatic renewal or continuous service without first obtaining the consumer’s affirmative consent”; and (3) a business must “provide an acknowledgment that includes the automatic renewal offer terms or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner that is capable of being retained by the consumer.”

The court noted that the consumer alleged that she had not been provided with “‘clear and conspicuous notice that she had been enrolled in an Audible membership’ because she never saw any offer or terms from either Amazon or Audible.” She also said that Audible, without her authorization, charged her credit card connected to her Amazon account for an Audible membership. She alleged she received no other emails or written communications from Amazon or Audible asking for her consent to the automatic renewal terms or assent to being charged for the Audible membership. The court concluded that the consumer sufficiently pleaded facts to state claims under Sections 17602(a)(1), 17602(a)(2), and 17602(a)(3) of the ARL.

The Case is No. 2:23-cv-01219-JHC.

Judge: Chun, J.

Attorneys: Charles Moore (Reese LLP) for Julia Heck. Charles Moulins (Fenwick & West LLP) for Amazon.com Inc.

Companies: Amazon.com Inc.; Audible, Inc.

Cases: Advertising StateUnfairTradePractices WashingtonNews