Class Accuses Audible and Amazon of a Bait & Switch

LOS ANGELES (CN) — Accusing Audible of bait-and-switch tactics and false advertising, a federal class action claims the audiobook seller and its parent company Amazon.com lure subscribers into buying monthly “credits” they may never be able to exchange for e-books.

Former Audible subscriber Grant McKee says he trusted Audible’s promise that the audiobook credits he bought with his monthly fee would never expire — only to discover that unused credits expire after six months and vanished instantly when he canceled his membership.

He “believed defendants’ representations that ‘one credit equals one audiobook,’ that audiobook credits would ‘never expire,’ and that a member can cancel any time with ‘no strings attached,’” McKee says in the March 10 lawsuit. “But defendants’ advertisements represent almost the exact opposite of how Audible membership plans really work.”

McKee says the Audible credits, for which members pay $14.95 per month, are the legal equivalents of prepaid gift certificates or gift cards. But because they expire after six months or when a membership is canceled Audible is violating federal banking laws that require gift certificates to be good for five years and a California law that says certificates may never expire.

“Like defendants’ other misrepresentations concealing key facts about Audible’s plans, Audible uses the label of ‘credit’ to conceal what is otherwise an illegal gift card scheme,” McKee says in the 33-page complaint.

He also accuses Audible and Amazon of cheating customers in how they charge their credit cards. If a member’s credit card is declined “for any reason,” Audible charges the monthly fee to any other credit card or payment method linked to the member’s Amazon account — without the member’s approval and even if that card belongs to the member’s spouse or business.

“According to Audible and Amazon (and possibly many other Amazon subsidiaries and affiliates), any credit cards stored on an Amazon account are fair game,” the complaint states. “This results in a modern form of conversion that is unlawful nationwide and that affects unsuspecting consumers like plaintiff without notice.”

Representatives of the two companies’ public relations departments did not reply to emails late Monday.

McKee’s attorney, Jamin Soderstrom of Irvine, estimated there could be thousands of Audible subscribers in the proposed class. “Audible keeps its subscriber base fairly confidential,” he said.

Soderstrom declined to predict how much the class could claim in damages. The complaint states it will meet the $5 million threshold for a federal class action. “It’s a very reasonable estimate to say it exceeds $5 million and probably greatly exceeds,” Soderstrom said.

McKee signed up for a free Audible trial membership in June 2016, which converted to a “Gold Monthly” membership after 30 days. Under that plan, Audible charged McKee’s credit card the $14.95 monthly fee, for which he received a credit each month to buy an audiobook.

He decided to cancel his membership in December, when he had two unredeemed credits. He intended to spend them once he decided upon two books he wanted.

“But upon canceling his membership plan, he learned that — contrary to Audible’s and Amazon’s representations — the credits he had purchased but not yet redeemed had automatically and immediately expired and that, due to his cancellation, he had forfeited the money he paid for the credits without receiving audiobooks,” his lawsuit says.

The complaint quotes Audible’s advertising promises that membership credits “do not expire as long as you have a membership … and stored credits are ‘rolled over’ to your next billing cycle, either monthly or yearly.”

The promotional material says there are “no strings attached” if a member wants to quit because “you can cancel at any time.”

But in “inconspicuous fine print,” Audible says the opposite, according to McKee.

“Once you have reached the rollover limit for your membership plan, your oldest credit(s) will expire in order for you to receive new credits,” the complaint states, quoting the fine print. “If you accrue too many credits and do not use them, you may lose some.”

McKee calls the company’s explanation — that old credits must expire to make room for new credits — a “shell game.”

“Defendants’ ‘use ’em or lose ’em’ explanation is just a convenient, deceptive euphemism” to avoid identifying the credits as the prepaid gift certificates they really are, he says.

McKee also claims that canceling an Audible membership, rather than having no strings attached, comes with “at least one major string … a noose, really” because all unredeemed credits automatically expire.

Soderstrom said he does not know of another lawsuit raising these claims against Audible, but he noted that a federal class action pending in Los Angeles accuses the SoulCycle indoor cycling gyms of selling certificates for spin classes that expire quickly.

That August 2015 complaint claims the fitness chain sold $93 million in certificates in 2014 and earned $25 million from certificates that expired without being used, according to news accounts.

McKee seeks class certification, restitution, corrective advertising, and compensatory and punitive damages for false advertising, conversion, violations of federal and state gift certificate laws, and violations of California consumer protection laws.

Soderstrom said Audible is represented by attorneys with the Silicon Valley-based law firm Fenwick & West.