November 13, 2013 8:46am PT by Eriq Gardner
Spotify Targeted by Class Action Lawsuit Over Automatic Subscription Renewals
Spotify continues to grow in popularity, but the music streaming service still needs to prove its mettle as a business.
The Sweden-based company has been hit with a class action lawsuit in San Francisco by a subscriber named Melissa Bleak who claims that automatic renewal charges to her premium account violate a California law requiring affirmative consent.
According to the complaint, when users upgrade to a premium plan that provides access to music on any device, customers are informed on Spotify's website that "if you do not cancel your subscription before the end of the free trial the credit card you provide will automatically be charged the Spotify Premium subscription fee of US $9.99 + $0.00 sales tax per month, until you cancel. You can cancel at any time by logging into your Spotify account and following the cancelation instructions."
Customers are further informed that they are authorizing Spotify to automatically bill their credit card each month.
But the lawsuit contends that this isn't enough.
"In the Premium Plan notice Defendant failed to provide a hyperlink to the Terms, and the Terms are not referenced at all on the Unlimited Plan notice," says the lawsuit. "Moreover, Defendant failed to provide a box to check or any other method by which Plaintiff's and Class Members could provide their affirmative consent to Defendants."
Spotify declined comment.
The company, which earlier this year said it had six million subscribers and 24 million active users, is reportedly on the verge of raising more than $200 million in new funding. With deals with large record companies including Sony, EMI, Warner Music and Universal, Spotify's revenues have grown nearly fourfold in the last two years to almost $600 million, but with heavy licensing costs, its losses have widened to more than $75 million a year.
The company has also recently made partnerships in the TV space, including a cross-promotional deal with Bravo that allows users to see playlists for The Real Housewives and other shows.