Dick Smith Warned For Sneaking Subscriptions Into Shopping Carts

The Commerce Commission has issued a warning to Kogan Australia Pty Limited, commonly known as Dick Smith, for likely misleading consumers, as their website automatically signed customers up for a $149 membership subscription.

Commerce Commission Competition, Fair Trading, and Credit General Manager, Vanessa Horne says consumers are focused on their intended purchase when shopping online and should not have to watch out for being automatically signed up to a subscription through a pre-selected tick box.

“Businesses have an obligation under the Fair Trading Act to not mislead consumers, including online shoppers,” Ms Horne says.

“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.

“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.

“The Commission is encouraging consumers to keep a look out for sneaky subscriptions when shopping online. As we head into the holiday shopping season, it’s important to take a moment to check exactly what’s in your cart before purchasing.

“If you think a business is being misleading about online purchases or subscriptions, please let the Commission know on our website,” Ms Horne says.

The Commission investigated allegations of misleading conduct under the Fair Trading Act following complaints from consumers that they were unknowingly supplied a 14-day free trial of the FIRST membership, which led to an ongoing payment obligation to pay $149 (annually) or $14.99 (monthly) once their trial period had ended.

From 3 July to 19 September 2023 Dick Smith’s website used a pre-selected tick box to add a FIRST trial to all eligible consumers’ shopping carts, unless consumers proactively opted out.

Most of the Commission’s complainants did not realise they had signed up to the FIRST trial during their purchase until they received a $149 charge from Dick Smith after the completion of the 14-day trial.

After the Commission raised the issue, Dick Smith stopped using pre-selected fields on their website for the subscription service and now use a sign-up method that requires consumers to actively sign-up to the FIRST subscription, if they choose.

Dick Smith also provided impacted consumers with a refund when they requested it.

The Commission believes this conduct was likely in breach of the Fair Trading Act, and after the investigation has issued a warning letter to Dick Smith. Ultimately only the court can determine if a breach has occurred.

Background

FIRST is a paid membership subscription programme that gives members access to features like free or express shipping, exclusive discounts, and rewards credits, when shopping on www.dicksmith.co.nz.

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