Commerce Commission takes action against HelloFresh

Tuesday, 11 March 2025

HelloFresh is a German meal-kit company that operates in many countries, including New Zealand.

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The Commerce Commission has warned of subscription ‘traps’ - subtle ways in which people are nagged or mislead into subscribing or find it difficult to unsubscribe - as subscription-based services become more ubiquitous.

The warning came this morning as the commission said said it was taking legal action against German-owned subscription meal service HelloFresh.

“We’re seeing more complaints about subscription services, the way consumers are being signed up to ongoing service contracts, and difficulties in cancelling subscriptions,” said commission’ deputy chair Anne Callinan.

The commission alleges HelloFresh breached the Fair Trading Act by misleading former consumers in cold calls in which they asked for customer “feedback”.

Those customers were offered discount vouchers, the commission alleged, and were left under the impression they could use those vouchers if they decided to sign up to have HelloFresh’s meal kits delivered in the future.

What actually happened, the commission said, was that former customers found their cancelled subscriptions were reactivated.

HelloFresh has added a link to its website entitled “Commerce Commission statement”, but when clicked on, it takes website users through to a page offering to sign them up for a meal kit subscription.

A statement sent to The Post said the alleged breaches ended in July 2023. “Call centre staff did not follow our strict processes and procedures relating to the reactivation of cancelled subscriptions following offers sent to former customers.

“This practice fell well short of our standards and should not have happened. We sincerely apologise to any customers who were impacted or inconvenienced at the time,” the statement said.

“We have cooperated with the commission’s investigation and took remedial action as soon as we became aware of the activities.”

Jessica Walker, head of research and advocacy at Consumer NZ, said that in August the Consumer Policy Research Centre in Australia had reported the likes of entertainment streaming services, marketplace loyalty programmes and fitness services used “dark patterns” of easy sign-up, and difficult-to-unsubscribe processes.

Commerce Commission deputy chair Anne Callinan says: “The commission is prioritising action against illegal online sales conduct.”

Australia, the European Union, and even the United States were ahead of New Zealand in moving to tackle subscription traps, she said.

Walker said the simplest definition of a subscription trap was when companies made it harder for consumers to cancel a subscription than it was to sign up for it.

The Commerce Commission says complaints about subscription traps are on the increase.

“It’s generally one click to sign up to a subscription, but when it comes time to unsubscribe, it’s rarely a one-click process,” she said.

The Australian research paper said the sign-up patterns were “built to influence consumer choice and behaviour that are often not in the consumer’s best interests”.

“This is often referred to as forced continuity, a subscription trap, or ‘Hotel California’, a place that is ‘programmed to receive. You can check out any time you like, but you can never leave’.”

The centre found three in four Australian consumers had found themselves in subscription traps costing them time and money, with one-in-10 having given up their attempts to cancel a subscription out of frustration.

The Consumer Policy Research Centre in Australia reported the use of psychological tactics used to shame and influence people trying to cancel subscriptions. Image was sourced from a process one company used to try to influence people into not cancelling their subscriptions.

These ranged from the trick of offering “free” trials after which they were converted into paid subscriptions automatically, to making it very hard to unsubscribe, to post-cancellation “nagging”.

In some cases, people trying to cancel were “confirm shamed” by being asked to click on tabs saying “I don’t like discounts”, and on others they were forced to go through long processes of clicking and question-answering, before being forced to speak to a call centre staffer to justify their decisions to cancel.

“Such tactics can belittle consumer choice and impact wellbeing,” the centre said.

There was also consumer resentment at being offered discounts for keeping their subscription.

One of the companies named in the centre’s report was Kogan, which owns the Dick Smith brand. The company was warned by the Commerce Commission in New Zealand for “sneaking subscriptions into shopping carts” during a nearly three-month period in 2023.

Action is being taken overseas that could see dark cancellation tactics banned.

“Europe, India and the United States are passing laws that stop businesses from making cancellation harder than subscribing to a service,” the centre said.

Callinan said: “Buying products online is increasingly a way of life for Kiwi consumers and so the commission is prioritising action against illegal online sales conduct.

“This includes subscription traps, which come in many forms and include situations where consumers are misled into signing up for a paid subscription without knowing.”

Complaints about subscription traps were on the rise, she said.

HelloFresh’s investors have seen its share price trend downwards since late 2021 after a Covid sign-up boom deflated.

Its latest financial statements for New Zealand were for 2023, and showed a decline in revenue from the previous year.

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