The Australian Competition and Consumer Commission (ACCC) initiated legal proceedings last year in the Federal Court against the online dating platform eHarmony Inc. (eHarmony), alleging that the company engaged in misleading conduct concerning its membership pricing, renewal terms, and duration. The ACCC's case, which commenced on 7 September 2023, pertains to conduct dating back to at least November 2019, with most of the alleged misleading practices still ongoing. This action highlights the ACCC's focus on advertising and marketing practices within the digital economy, which is one of its compliance and enforcement priorities.

ACCC’s allegations 

The ACCC has said that it has received hundreds of complaints from consumers about eHarmony's memberships. It contends that eHarmony's alleged conduct deprived consumers of the ability to make informed decisions about joining the dating service and the amount they spent. Significantly, the ACCC is also cornered that dating apps, like eHarmony, provide highly personal services, and consumers engaging with them may be more susceptible to misleading or manipulative selling practices due to their emotional state, compared to less personal transactions. 

Misleading 'Free Dating' Claims

eHarmony allegedly represented its services as offering 'free dating,' implying that consumers could engage in ongoing two-way communication with other users without charge. However, the ACCC claims that the 'basic' or 'free' membership tier offered very limited functionality. Basic members, after completing an 80-question compatibility quiz, could only view blurred profile photos, 'like' other profiles, receive and send a single reply to a premium member's text message, send one virtual smiley face, and use an 'icebreaker' feature. The ACCC argues there was no functional aspect of 'free dating' as advertised, as consumers were required to upgrade to a paid 'premium' membership to engage in ongoing communication, read all messages, or view unblurred photos, effectively requiring payment to "actually date". This practice is said by the ACCC to be an example of a 'freemium' business model where key features are hidden behind a paywall, despite the service being advertised as 'free'. eHarmony, in its defence, argued that the website pages, when viewed in their entirety, do not convey the misrepresentation alleged by the ACCC.

Automatic Membership Renewal (Subscription Trap) 

The ACCC alleges that eHarmony engaged in misleading conduct by creating a false impression that premium memberships were for an initial fixed term of 6, 12, or 24 months, when in reality, these subscriptions automatically renewed, sometimes at prices significantly higher than the initial subscription. The automatic renewal terms were allegedly not prominently disclosed; instead, they appeared in small font late in the purchase process and within the terms and conditions. The ACCC is concerned with so-called "subscription traps" in digital services, where signing up is easy - but cancelling is difficult. Consumers are also said to believe that they committed to a shorter plan, only to find it was longer and more expensive due to auto-renewal. 

Failure to Display Accurate Minimum and Total Prices 

eHarmony is alleged to have failed to have prominently and accurately displayed minimum and total prices during the purchase process. The advertised minimum monthly price, displayed as 'from $xx/month', allegedly did not include a mandatory additional fee ($3 per month) applicable if consumers chose to pay for their membership on a monthly basis. The ACCC argues that eHarmony failed to prominently disclose the minimum total price as required by law, with this information only appearing in small font late in the purchase process. Consumers were allegedly unable to calculate the full price until further along in the subscription process.

Misleading Statements about One-Month Memberships and Cancellations 

eHarmony is also accused of misleading consumers regarding the availability of one-month premium memberships and their ability to cancel subscriptions. For over three and a half years, from September 2019, some website pages allegedly stated that consumers could subscribe for one month, which the ACCC alleges was not true, as memberships were only available for 6, 12, or 24 months, with automatic renewal. Additionally, for at least two years from August 2019, eHarmony allegedly falsely represented that memberships could be cancelled after signing up, through statements like "there is still an opportunity to withdraw after signing up if you have second thoughts" under a "Try before you buy – and no pressure to sign up" heading. 

eHarmony's defence

eHarmony, in its defence, argues that the website pages, when viewed in their entirety, do not convey the misrepresentations alleged by the ACCC. In effect, eHarmony appears to argue that all relevant information was available on the site – usually in the terms and conditions, but also (on occasion) at important stages of the buying process.  For instance, it claims that:

• consumers are warned of renewal at the point of subscription, with relevant information in the terms and conditions directly above the subscribe button;
• pricing information about renewal is likewise contained in the terms and conditions of the site and is also presented at the point of subscription directly above the subscribe button on the page; and
• if consumers are expected to see renewal terms, they are also expected to see and understand pricing details presented in a similar manner.

The liability hearing concluded earlier this month in the Federal Court and we expect a judgement from the Court by the end of the year.

These two have history

The ACCC expressed disappointment, stating that eHarmony "should have been well and truly on notice about the need to provide consumers with clear and accurate information". This is because the ACCC had consulted eHarmony in 2016 during the development of its "Best practice guidelines for dating websites". These guidelines specifically highlight the importance of dating sites clearly disclosing all prices, fees, and charges upfront, and making it explicit that subscriptions automatically renew with ongoing fees until cancelled. If the ACCC is successful in its claims, then this “prior relationship” may well have an impact on civil penalties imposed by the Court.

What does it mean for your business?

The eHarmony case provides crucial insights for any business, particularly those operating digital platforms or offering subscription-based services in Australia. To avoid similar regulatory action, consider the following:

1. Always display the minimum total price consumers will pay upfront and prominently. If there are mandatory additional fees for different payment methods (e.g., monthly instalments vs. upfront payment), these must be clearly disclosed and factored into the advertised price. Avoid "from $xx/month" advertising if it doesn't represent the true minimum cost including all mandatory fees.
2. If your service operates on an automatic renewal model, this must be explicitly and prominently disclosed to consumers before they commit. Do not bury these terms in small font or only in terms and conditions. Consumers should have a clear understanding of the full duration and cost of their commitment.
3. Be truthful about the available membership lengths. If a "one-month" option isn't truly available, don't advertise it. Similarly, be clear about cancellation policies. If customers cannot obtain a refund for unused portions of a subscription, do not imply or state that they can easily "withdraw" or "cancel" after signing up if they have "second thoughts".
4. Authenticity of "Free" Services: If you advertise a "free" tier or trial, ensure that it provides meaningful functionality relevant to the core service being advertised. If key features that define the service are paywalled, the "free" offering may be deemed misleading. Users should be able to genuinely experience the advertised service without being immediately required to pay.
5. Recognise that consumers engaging with certain services, especially those that are highly personal or emotional, may be more susceptible to misleading practices. This increases the regulatory expectation for transparent and ethical conduct.
6. The ACCC's continued focus on digital platforms, subscription traps, and manipulative marketing practices means that businesses in the digital economy must proactively review their consumer offerings and ensure full compliance with the Australian Consumer Law.