The El Segundo-based company that markets the Proactiv acne treatment line and Wen hair care products will pay $8.5 million to settle a consumer protection lawsuit alleging it did not properly notify customers regarding automatic renewal payments, the Los Angeles County District Attorney's Office announced Monday.
"As new technologies are changing the consumer environment, we must ensure that businesses do not abuse these tools," District Attorney Jackie Lacey said. "This settlement will help protect the public from unauthorized payment renewals and should serve as a warning to other companies that would violate consumer protections."
The settlement with Guthy-Renker L.L.C. stemmed from a suit brought by Lacey and the district attorneys of San Diego, Santa Clara and Santa Cruz counties, as well as the Santa Monica City Attorney's Office, which make up the California Automatic Renewal Task Force.
The company will pay up to $7.3 million in restitution to affected customers and $1.2 million in penalties, according to prosecutors, who alleged that Guthy-Renker did not properly notify customers when their accounts were automatically charged following purchases made on Proactiv's website, among others.
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Guthy-Renker also agreed to change its sales practices and to notify customers eligible for restitution.
That includes Wen customers charged after May 2012 and Proactiv customers charged between July 2014 and August 2016.
Under state and federal law, online businesses must clearly and conspicuously disclose all automatic renewal charges and terms and get the affirmative consent of consumers for those charges.