Stay ADvised: 2025, Issue 15

In This Issue:

• FTC Alleges LA Fitness Employs Unfair Practices to Obstruct Membership Cancellations
• HelloFresh Pays $7.5 Million to Settle California Auto-Renewal and False Advertising Claims
• NAD Turns Up the Heat on PFAS Claims in Cookware Advertising
• NAD Challenges Review Site Over Insufficient Disclosures

FTC Alleges LA Fitness Employs Unfair Practices to Obstruct Membership Cancellations

The Federal Trade Commission (FTC) recently filed a lawsuit alleging LA Fitness that the nationwide chain of gyms violated the FTC Act and the Restore Online Shoppers' Confidence Act (ROSCA) by making it unreasonably difficult for consumers to cancel their gym memberships.

According to the FTC, LA Fitness intentionally created hurdles for customers seeking to opt out of their subscriptions. While signing up is simple enough—customers pay first and last month's dues and are then auto-enrolled in monthly renewals—ending the membership requires navigating what the agency calls "complex and exacting" procedures.

For in-person cancellations, members reportedly must meet with a single operations manager, available only during limited business hours—leaving many members unable to address their concerns without potentially missing work or rearranging their schedules—and bring a printed cancellation form from the company's website. Yet, access to that form is often thwarted by login barriers: many customers manage their accounts through the LA Fitness mobile app, not the website, and resetting credentials requires obscure details like the original signup email, a unique key tag number, and partial payment information.

Even after obtaining and printing the form, consumers must hand-deliver it to the operations manager—whose availability, according to LA Fitness policy, "is subject to change depending on the availability of the Operations Manager." This lack of consistency places an additional burden on customers, rendering the cancellation process effectively inaccessible for many.

The alternative "by mail" method isn't much easier. Members must still print and mail the same cancellation form after navigating LA Fitness's complicated credential-reset hurdles, the FTC says, even though the gym's policies quietly allow for a cancellation request in the form of a written notice containing the requisite information. However, as alleged by the FTC, LA Fitness does not proactively inform customers of this more accessible option, directing them instead to its arduous procedures. According to the FTC, these practices undermine consumer autonomy, forcing many members to continue paying for services they no longer wish to use.

The FTC's complaint further alleges that even when consumers navigate the cumbersome process and successfully mail the cancellation form, LA Fitness frequently fails to acknowledge receipt. In numerous instances, customers reported sending multiple tracked cancellation forms via postal mail, only to find that their memberships were not terminated and billing continued. Even when postal tracking confirmed delivery of the cancellation forms, the gym allegedly continued to charge monthly fees without taking action to process their requests.

Consumers who attempt to follow up by phone allegedly face further frustration. Reports indicate that complaints about unauthorized charges or unprocessed cancellations are frequently deflected or dismissed by LA Fitness customer service representatives, who allegedly rely on a generic telemarketing script citing member privacy protection as a reason for the company's refusal to provide meaningful assistance.

Even more troubling, the FTC asserts that LA Fitness has found ways to continue billing customers who cancel their credit cards to stop unauthorized charges. By obtaining and charging updated account information, the gym makes it exceedingly difficult for those seeking an escape from its subscription trap. Ultimately, these business practices create an environment where consumers are left with little recourse, frustrating their attempts to exercise their right to terminate their memberships.

Key Takeaways

The FTC's action against LA Fitness underscores the agency's continued commitment to enforcing consumer protection laws governing subscription cancellations and online disclosures, even in the wake of the Eighth Circuit vacating the proposed "Click-to-Cancel" rule on procedural grounds. The complaint reinforces that overly burdensome or opaque cancellation practices may constitute unfair or deceptive acts under the FTC Act and ROSCA, particularly where consumers are not provided clear, simple, and accessible means to terminate recurring charges.

This case also signals heightened FTC scrutiny of digital interfaces—whether through websites, mobile applications, or other online platforms—that employ design elements effectively impeding consumer choice or obscuring key information. Although the agency no longer relies on the "dark patterns" terminology, the enforcement focus remains squarely on practices that manipulate or frustrate users seeking to manage or cancel ongoing services.

Companies offering subscription or membership-based services should closely evaluate their enrollment, renewal, and cancellation practices. Companies should ensure that consumers can easily locate and complete cancellations through the same channels used for enrollment (e.g., online or via app), clearly disclose cancellation options and procedures, and maintain records of cancellation requests and responses. By proactively reviewing and refining these processes, businesses can reduce exposure to FTC investigations and private litigation while demonstrating good-faith compliance with evolving regulatory expectations around subscription and consumer autonomy practices.

HelloFresh Pays $7.5 Million to Settle California Auto-Renewal and False Advertising Claims

Meal delivery service HelloFresh has agreed to pay $7.5 million to settle allegations that it violated California's Automatic Renewal Law (ARL) and Unfair Competition Law (UCL) through misleading subscription and promotional practices. The settlement, announced by Santa Clara County District Attorney Jeffrey Rosen, resolves claims that the company failed to clearly disclose automatic renewal terms, obtain consumers' express informed consent, and provide post-purchase acknowledgments required under the ARL.

According to the complaint, HelloFresh's subscription model allegedly created friction for consumers attempting to cancel. The company did not provide a straightforward online mechanism for cancellation, instead requiring users to navigate multiple steps or contact customer service directly. The complaint further asserted that HelloFresh failed to make clear and conspicuous disclosures about renewal pricing and the terms of its "free trial" offers.

Prosecutors also alleged violations of California's UCL, claiming HelloFresh falsely advertised "free meals," "surprise gifts," and "free shipping." In reality, the promotions often applied only as partial discounts on future purchases, and only the first delivery qualified for free shipping. The company also allegedly used countdown timers on its website to create a false sense of urgency, pressuring consumers into completing transactions under misleading pretenses.

Key Takeaways

The HelloFresh settlement underscores California's aggressive enforcement of its Automatic Renewal Law (ARL) and Unfair Competition Law (UCL) against companies using subscription or recurring billing models. The ARL requires businesses to clearly disclose renewal terms before purchase, obtain consumers' express informed consent, provide post-purchase confirmations detailing cancellation procedures, and offer an easy online cancellation method. Regulators have also emphasized that marketing claims such as "free meals," "free shipping," or "limited-time offers" must be supported by clear, conspicuous disclosures of any conditions. Misleading urgency tactics—like countdown timers or unclear trial terms—may be viewed as deceptive under California law.

In light of ongoing enforcement activity, companies offering automatically renewing services should carefully review their subscription flows, marketing materials, and cancellation processes to ensure full compliance with the ARL and UCL. Proactively building transparent and consumer-friendly practices not only mitigates regulatory risk but also promotes customer trust and retention.

NAD Turns Up the Heat on PFAS Claims in Cookware Advertising

The National Advertising Division (NAD) recently reviewed a dispute over health-related claims about nonstick cookware containing PFAS, or "forever chemicals." The Cookware Sustainability Alliance (CSA)—representing traditional nonstick cookware manufacturers—challenged advertising claims made by Caraway Home, a company that sells ceramic cookware advertised as PFAS-free.

CSA alleged that Caraway's ads implied traditional nonstick cookware is unsafe, toxic, or capable of releasing harmful chemicals when overheated, while positioning Caraway's ceramic products as healthier alternatives. CSA also took issue with Caraway's implied claims that nonstick cookware exposes consumers to harmful PFAS that can sicken people.

NAD agreed that Caraway's express claims—such as "most traditional cookware is made with forever chemicals and when they are overheated, they can release these same toxins into your food"—alongside imagery of smoky and sludge-filled pans and references to PFAS, conveyed the message that competing nonstick cookware exposes consumers to a harmful form of PFAS that can release toxins into a person's home and make them sick.

Although Caraway submitted an expert report claiming PTFE-based nonstick coatings pose health risks, NAD found the evidence insufficient. CSA countered with prior NAD precedent—specifically a 2012 decision involving GreenPan—which determined that PTFE degradation occurs only at extreme temperatures unlikely in normal cooking. Moreover, NAD determined that the studies Caraway submitted in support of its argument that PTFE is toxic and harmful to humans were not a good fit for the claim at issue, because the studies either did not distinguish the PTFE used in the nonstick pans from other PFAS or tested a different type of PFAS. NAD concluded that the reasoning in that case remains valid and that Caraway's supporting studies did not demonstrate that consumers would be exposed to harmful PFAS during ordinary use.

NAD did find that Caraway had provided a reasonable basis for the claim that its cookware is free of PFAS and is non-toxic, but it stopped short of greenlighting the claim that competitor nonstick cookware is less safe than Caraway's products. NAD also found that Caraway could advertise its origin story that its founder had gotten sick with the "Teflon flu," but not in a way that implies competitors' products are toxic or cause illness.

Key Takeaways

NAD's decision underscores its continued insistence on robust, product-specific substantiation for health and safety claims—particularly those involving PFAS and other "forever chemicals." Despite increasing consumer skepticism toward PFAS-containing products, NAD reaffirmed that advertisers must provide reliable, product-specific evidence showing actual harm under normal use—not rely on general concerns about chemical safety or extreme conditions.

While Caraway may truthfully market its cookware as PFAS-free and non-toxic, NAD made clear that it cannot imply competing products are unsafe without scientific proof. The case serves as a reminder that health-related claims must be precise, well-substantiated, and free of fear-based or exaggerated messaging. As consumer attention on "chemical-free" and "non-toxic" products grows, advertisers can expect continued scrutiny of such claims.

NAD Challenges Review Site Over Insufficient Disclosures

Continuing its trend of assessing misleading advertising in review and ranking sites, the National Advertising Division (NAD) initiated a challenge to claims made on TrustedCompanyReviews.com. NAD focused on the site's "Best Debt Consolidation Companies of 2024" listings, examining whether consumers could reasonably understand which content was editorial and which was advertising. Though the site, owned by EIA Marketing, claimed to use an objective ranking methodology and included some disclosures, NAD found these notices insufficient to inform consumers about financial relationships.

NAD acknowledged that while the site does not explicitly claim its reviews are impartial and has no ownership interest in the companies it ranks, the receipt of commissions still classifies this content as advertising. Effective disclosures, NAD emphasized, must be clear, conspicuous, and unavoidable. Advertisers must draw attention to the disclosure; it isn't enough to put it somewhere in the ad. Here, disclosures buried under the browser address bar, hidden in hover-over text, or placed at the bottom of the page near Terms of Service were unlikely to alert consumers. Hover-over elements were particularly problematic, as many users would not realize they contained important information.

Drawing on the 2023 Smile Prep NARB compliance decision, which also featured a review site where some but not all of the content was advertising, NAD recommended that TrustedCompanyReviews.com take a number of steps to improve transparency. First, it should identify the companies that are paying it commissions. It should also place disclosures prominently at top and bottom of every webpage and clarify that the company receives commissions from partners. The company should also avoid hidden or hover-over notices. Finally, it should communicate to consumers while it makes commissions from links to its affiliates, that it is not paid to publish content and does not permit its affiliates—or any third party—to control or otherwise approve any of its content.

Key Takeaways

This case reinforces a simple rule: if a review or ranking site accepts commissions, that content is advertising, and consumers must be clearly informed. Disclosures must be prominent, unavoidable, and consistent on every page—burying them or hiding them behind hover-over text is not enough. Even when editorial independence is maintained, financial relationships cannot be left to consumer inference. For brands and review sites, the lesson is clear: make disclosures unavoidable, transparent, and consistent—or risk NAD scrutiny.

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