(CN) - Online marketers can settle claims that their "free shipping" offer was a ruse to enroll customers automatically in a paid membership program, a federal judge ruled.
The class - made up of named plaintiffs Daniel Cox, Joseph Lynch and Nicole Hall - claimed that they encountered a pop-up ad offering free shipping on their purchases while shopping on ProFlowers.com, a website operated by Provide Commerce Inc. When the customers clicked on the pop-up, they were allegedly directed to another website operated by Clarus Marketing Group.
Directed to that site, the class said Clarus offered free shipping on the present transaction, plus free-shipping rebates on 12 future ProFlowers.com purchases. To accept the offer, they allegedly entered only their email addresses and zip codes-but no payment information.
Neither Clarus nor Provide Commerce warned customers that accepting the "free shipping" offer authorized Clarus to enroll them in its FreeShipping.com membership programs, according to the complaint. Those programs cost the plaintiffs between $9 and $20 monthly, paid through payment information apparently shared by Provide Commerce.
The lead plaintiffs filed two class actions in 2011, accusing Provide Commerce and Clarus of violating federal anti-racketeering law, the Electronic Funds Transfer Act, and a number of violations of state consumer-protection and business laws, as well claims for negligence and invasion of privacy.
After consolidating the two actions, the parties met with a mediator in May 2012 and reached a proposed settlement last October.
U.S. District Court Judge Marilyn Huff both certified the class and approved the settlement last week, noting that only 62 of the more than 1 million class members had chosen to opt out of the settlement. Provide Commerce agreed to offer class members either 20 percent off a future purchase or a combination of a $15 credit and a portion of the $500,000 settlement fund.
Huff also approved attorneys' fees and costs of $640,000, and handed each of the lead plaintiffs a $5,000 incentive award.
Any remaining money in the settlement fund will be given to California Western School of Law and used to promote internet security and data privacy, Huff said.
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