The Australian Competition and Consumer Commission (ACCC) has launched separate Federal Court proceedings against major meal-kit delivery services HelloFresh and Youfoodz. The consumer watchdog alleges the companies, both owned by German parent firm HelloFresh SE, misled customers with complex subscription practices that trapped them into unwanted payments.
Allegations of Misleading Conduct and 'Dark Patterns'
The ACCC claims the companies breached Australian Consumer Law by advertising that customers could easily cancel their subscriptions online before a specified cut-off time. However, the reality was starkly different. Despite signing up seamlessly online, many consumers found they could only cancel by speaking directly to a customer service representative.
This tactic is a prime example of what Assistant Minister for Competition, Andrew Leigh, has termed "dark patterns" – design features used by firms to manipulate user behaviour. The ACCC alleges that between January 2023 and March 2024, a total of 62,061 HelloFresh customers and 39,408 Youfoodz customers were charged a fee even though they had cancelled before the stated deadline for their first order.
Confusing Sign-Up Processes and Hidden Charges
Further allegations detail a particularly problematic practice by HelloFresh. The ACCC states the company required customers to enter payment details to view meal options, while representing they would not be charged unless they actively selected meals. The watchdog contends that when consumers progressed to the meal selection screens, they were unknowingly enrolled in an ongoing subscription and charged for the first delivery.
Consequently, many people only discovered they had a subscription when a meal box arrived at their door or a payment notification appeared. ACCC Commissioner Liza Carver emphasised the obligation on traders, stating, "Businesses must clearly communicate when consumers are signing up for a subscription, as well as how they are able to cancel and avoid being charged."
In one cited case, a Youfoodz customer allegedly cancelled their subscription within minutes of signing up. Despite this, they later received a text stating they had been charged and their kit would be delivered the next day. After multiple refund requests, they were reportedly only offered a 50% refund.
Legal Action and Government Crackdown on Dodgy Tactics
The ACCC is seeking a range of outcomes from the Federal Court, including compensation for affected customers, financial penalties, and orders to ensure future compliance with consumer law. This action follows a precedent where HelloFresh New Zealand was fined $NZ845,000 (approximately $A735,300) in October after pleading guilty to misleading consumers over subscription reactivations.
The case aligns with the Albanese government's pledge to eradicate deceptive practices like subscription traps and drip-pricing. The government plans to commence consultation on outlawing these manipulative tactics in early 2026, with legislation expected by the end of that year.
"We've brought these two cases because we allege that HelloFresh's and Youfoodz's conduct involved a suite of confusing and unclear subscription practices in breach of Australia's consumer laws," Commissioner Carver said, highlighting the significant public concern over complicated cancellation policies.
