Cloud-Storage Provider Settles Consumer Protection Case

Source: District Attorney of Santa Barbara County

Santa Barbara County District Attorney Joyce E. Dudley announced today that Box, Inc., has been ordered to pay penalties, costs and restitution in a civil law enforcement case alleging that Box’s online sales practices violated the law.  The company is paying $274,000 to resolve the case without admitting liability, as part of a final court judgment entered on February 14, 2020 and negotiated by a team of local prosecutors.  This team comprised of District Attorney Dudley’s Office, the Santa Monica City District Attorney’s Office, and the District Attorney’s Offices of Los Angeles, San Diego, Santa Clara and Santa Cruz counties.

The prosecution team learned that Box was charging California consumers for automatic renewals of cloud-storage accounts without disclosing key terms of the renewals or obtaining express prior consent as required by law.  The complaint alleges that Box’s conduct violated California’s Automatic Renewal Law, False Advertising Law and Unfair Competition Law, as well as the Federal Restore Online Shoppers Confidence Act.

The judgment requires Box to have full transparency with consumers about automatically renewing cloud-storage accounts.  The company now must:

• Clearly and conspicuously disclose the renewal terms;
• Obtain consumers’ consent through a separate check-box (or similar mechanism) that does not include other terms and conditions;
• Send a clear summary of the renewal terms after consumers pay; and
• Allow consumers to readily cancel.

The judgment ordered Box to pay $216,000 in civil penalties and $24,000 for costs of investigation – all of which will be evenly divided among the six prosecutors’ offices which brought the case.  In addition, Box must pay $34,000 in cy pres restitution to the Consumer Protection Prosecution Trust Fund.

Box cooperated with the prosecutors to reach this resolution and has already taken steps to correct its violations.

District Attorney Dudley said, “companies with automatically renewing subscription services are a large part of our economy, and unclear or hidden terms are harmful to consumers and against the law.  Consumers are entitled to make informed choices about how to spend their money.”