The consumer watchdog is suing home meal delivery providers HelloFresh and Youfoodz for allegedly misleading consumers, claiming the companies used what’s known as a “subscription trap”.

The ACCC claims the high profile meal services broke consumer law by telling customers they could easily cancel subscriptions via online accounts when this wasn’t the case. 

Instead, consumers who tried to cancel prior to the first delivery cut-off time were still charged and could only cancel if they spoke with a customer service representative. 

The consumer watchdog has launched two proceedings in the Federal Court.

“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 Australia’s consumer laws,” ACCC Commissioner Luke Woodward said.

HelloFresh factory with boxes and meal kits

HelloFresh which owns both brands has been contacted for comment.  (ABC Landline)

“Despite what HelloFresh and Youfoodz represented to new Australian subscribers, tens of thousands of consumers were charged for their first order, even though they cancelled their subscription before the cut-off date.”

HelloFresh allegedly engaged in this misleading conduct for more than two years until March this year, while Youfoodz did so between October 2022 and November last year.

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This impacted 62,000 HelloFresh customers and 39,000 YouFoodz customers who were charged despite cancelling their subscription before the cut-off date, according to the lawsuits. 

HelloFresh required customers to hand over payment details before viewing the full menu but it told customers they, “would not be charged unless they selected meals from the menu”.

However, customers were entered into an ongoing subscription, according to the consumer watchdog.

“In the case of HelloFresh, many consumers had not even selected meals but were unknowingly subscribed and charged regardless,” Mr Woodward said.

HelloFresh launched in Australia in 2012 and sells popular meal kits which allow a faster preparation time.

It advertises heavily and its promotional material features high-profile celebrities like Robert Irwin, TV presenter Sophie Monk and comedian Celeste Barber.

But customers have long vented their frustration at its subscription practices with online reviews full of complaints about how hard it was to unsubscribe without being hit with unwanted charges.

In New Zealand, HelloFresh was fined $NZ845,000 for misleading consumers.

The fine was for cold-calling former customers under the guise of getting feedback but was instead about trying to get people to restart orders with discount vouchers, without it being made clear it could lead to a subscription being restarted — according to New Zealand’s Commerce Commission.

HelloFresh which owns both brands has been contacted for comment. 

Push against subscription traps

The Albanese government is concerned about “unfair trading practices” and is looking at introducing legislation to counter it.

Consumer groups have long called for action on “subscription traps” where it is easy for customers to start paying a company but very difficult to stop.

The Albanese government promised in 2023 it would crackdown on subscription traps and other unfair business practices with new consumer laws.

That push received a major boost in November when states and territories agreed to back its plan to ban “unfair trading practices”.

Assistant Minister for Competition Andrew Leigh said the government was “putting an end to sneaky business tricks like subscription traps and hidden fees”.

“These reforms will stop unfair trading practices that distort consumer choice and drive-up costs, making markets fairer and giving Australians a fair go,” he said.

The government said it would draft the new laws and begin consultation next year.