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Last month, the Oregon Attorney General entered into a settlement with grocery delivery service HelloFresh, resolving allegations that the company misled consumers with deceptive "free meal," "free shipping, and "free gift" offers. As part of the settlement, HelloFresh agreed to pay $106,000.
When announcing the settlement, Oregon Attorney General Dan Rayfield said, "There's no such thing as 'free' if families must spend hundreds of dollars to unlock the deal."
According to the Oregon AG's allegations, HelloFresh promoted the availability of "free meals" that weren't really free. Instead, "discounts were spread across multiple weekly orders, requiring customers to spend hundreds of dollars to receive the full promotion."
The Oregon AG also alleged that when HelloFresh advertised free gifts – such as an 8" Caraway fry pan – the company failed to disclose "that consumers had to buy a certain number of boxes to receive advertised gifts."
In addition, the Oregon AG said that the company's "free shipping" offers misled consumers because they only applied to the first box and the offer terms weren't clearly disclosed.
What are some important take-aways here?
First, regulators think that "free" offers are particularly compelling to consumers and that marketers should take extra care – when promoting something as "free" – to ensure that consumers aren't misled. When making a "free" offer, you should be prepared for the fact that regulators may take a closer look at what you're doing.
Second, if there are material terms of an offer that need to be disclosed in order to prevent a "free" offer from being misleading, it's unlikely that some fine print is going to do the trick. If there's important information that consumers need to know, that information should be disclosed clearly and conspicuously. Will the disclosures actually be seen, read, and understood by consumers?
Third, ambiguous disclosures that don't give consumers full information about the terms of the offer are unlikely to satisfy the clear and conspicuous standard. (Remember the FTC's H&R Block case?) As Oregon's investigation seems to say, it may just not be enough to tell people that there are important conditions or additional costs that apply; you've actually got to tell consumers what they are in a way that easy for them to understand.
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