SAN DIEGO (CN) — Over a million online shoppers who said Pro Flowers and other websites sold their information and created “phony” rewards programs they had to pay for monthly will get part of a $38 million settlement.
The plaintiffs claimed when they completed a purchase on one of Provide Commerce’s websites, including Pro Flowers, Red Envelope, Sharri’s Berries and others, a pop-up window came up offering $15 off their next purchase as a “thank you gift.”
The message requested responders enter their email address and zip code and click the “accept” button. Provide Commerce then transmitted customers’ personal information to Encore Marketing International without their consent, according to the plaintiffs.
Encore then enrolled members in a “rewards program” and charged their credit or debit cards a $1.95 activation fee, followed by a $14.95 monthly fee, according to U.S. District Judge Cynthia Bashant’s summary of the case on Tuesday.
Provide Commerce and Encore denied the allegations, claiming the rewards program details were properly disclosed and that plaintiffs entered into electronic contracts with Encore to be a part of the rewards program, Bashant summarized.
The defendants filed an appeal after another federal judge, U.S. District Judge Anthony Battaglia, issued a final order approving a class settlement in 2013.
In 2015, the appeals court issued an order vacating Battaglia’s judgment and remanding the case for further proceedings in light of another appeals court decision on a similar case. After hearing oral arguments from the parties this July, Bashant adopted Battaglia’s order from 2013.
The settlement includes $12.5 million in non-reversionary cash plus $20 merchandise credits which will be automatically sent via email or snail mail to all members of the class. If all members of the class use the full $20 merchandise credit the total settlement would be $38 million, according to the order.
The non-reversionary cash fund was set up to reimburse up to 1.5 million class members who had been charged an activation fee or monthly fee without their consent and pay for attorney’s fees, with any leftover cash going to fund higher-education projects relating to internet privacy and consumer protection, according to court documents.
Bashant found the class settlement was not a “coupon settlement,” because the $20 credit “allows class members to purchase any number of products from several different websites, many of which do not require the class member to spend any of his own money.”
The defendants claimed the $8.65 million in attorney’s fees is based off a percentage of the “overinflated” settlement potentially worth $38 million. They said that basing the attorney’s fees off the $12.5 million set aside for the non-reversionary cash fund is more appropriate.
But Bashant pointed out the 1.5 million class members were individuals who expressed interest in receiving merchandise credits and would likely take advantage of the $20 settlement credit.
“The chances of them actually using these gifts are much higher than others who have not expressed a preference or interest in receiving the gifts,” Bashant wrote.
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