Salem, Oregon – The Oregon Department of Justice has struck an agreement with Grocery Delivery E-Service USA, Inc., also known as HelloFresh, after claims that the company used misleading ads to market its meal-kit subscriptions. The announcement came from Attorney General Dan Rayfield. He said that the settlement was a start toward holding the well-known business accountable for advertising that tricked customers with deals that sounded good but had expensive strings attached.
The investigation found that HelloFresh was running ads for new members that promised things like “10 free dinners,” “free shipping,” “$180 off,” and even a “Free 8″ Caraway Fry Pan.” Customers eventually learned that to get the benefits, they had to place multiple purchases each week, pay for more meal kits, and reach spending limits that were far higher than what the ads said. The incentives weren’t free; instead, they worked more like staggered discounts that added up to hundreds of dollars across numerous purchases before the full deal could be used.
HelloFresh is one of the biggest meal kit subscription services in the US. It serves millions of homes and spends a lot of money on advertising on online platforms. State authorities started looking into the company after seeing a lot of ads delivered to people in Oregon. Their investigation indicated that buyers were not being notified up front that they had to buy a particular quantity of boxes to get these promotions. Many times, subscribers who canceled early—usually because they were unhappy or couldn’t afford it—never got the free item they were promised or the full worth of the discount. Even “free shipping” was just for the first shipment. Later shipments had extra fees, even though the ads said otherwise.
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HelloFresh has to pay $106,000 to the State of Oregon and change the way it advertises as part of the settlement negotiated under an Assurances of Voluntary Compliance agreement. The new rules say that the corporation must properly explain all of its price terms, such as if discounts are exclusively for first-time consumers or only for first orders. Any promotion that is called “free” must now clearly identify all of its restrictions, not just bury them in fine print or use imprecise wording. The corporation also can’t advertise free shipping any longer until customers really do get free shipping for the whole time the deal is available.
The case serves as a warning that even major companies should be transparent in their advertising. Oregon officials argue that the settlement protects local customers and sends a message to companies around the country that they must be transparent and truthful in their advertising.
