HelloFresh and Youfoodz sued by ACCC over allegedly misleading consumers

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 before 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.

"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.

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.

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

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.

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 that it would crack down 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.

In a statement, HelloFresh group said it took the ACCC's claims seriously.

"We have no intention to confuse customers into accepting an unwanted first delivery, and there is no benefit to our brand or business," a spokesperson said.

"We will continue to engage constructively with the ACCC to meet the needs of consumers. As this matter is now before the Court, we will not be providing further comment at this time."