Leventhal v. Streamlabs LLC, No. 22-cv-01330-LB, 2022 WL 17905111 (N.D. Cal. Dec. 23, 2022)
Leventhal, on behalf of a nationwide class, alleged that
Streamlabs LLC deceives consumers into signing up for a subscription product
that carries an automatic monthly fee of $5.99. Streamlabs allows streamers
collect donations from viewers through third-party payment processors (such as
PayPal). Streamlabs Pro allows donors to add GIFs or other effects (such as
hearts, stars, or confetti) to the messages that accompany the viewers’
donations. “The plaintiff in this case added a GIF to a donation and contends
that Streamlabs’ subsequent disclosure to her — that adding a GIF or effect
required joining Streamlabs Pro for $5.99 per month — was deceptive because it
suggested that it was a one-time fee and did not disclose that the $5.99
monthly fee would renew automatically, in violation of California’s Consumer
Legal Remedies Act (CLRA) and Unfair Competition Law (UCL).” The court found
that she’d stated a plausible claim.
California’s Automatic Renewal Law (ARL) requires conspicuous
disclosure of subscription terms and a consumer’s affirmative consent to
automatic renewal, but Leventhal lives in New York. Nonetheless, the allegations,
if true, plausibly plead that Streamlabs deceived consumers with its
disclosures about the $5.99 fee.
At the time of her donation, the streamers’ donation page looked like this:
 |
| essentially the same thing but in white |
The page has a place to specify a donation amount, a place
to send a message to the streamer, the message “Donate at least 1USD to use a
GIF,” thumbnail pictures of GIFs and effects (with the word “Pro” next to
them), and a green “donate” button to submit the donation. It says nothing
about subscription fees.
The current donation page looks like this:
Instead of thumbnail pictures, it has a red box with “Extras Pro $5.99/mo” and slide buttons that allow a viewer to add a GIF or effect.
For both versions of the donation page, when a viewer clicks
“Donate,” a “Donation Confirmation” page pops up:
In a red box, it shows a $5.99 charge for Streamlabs Pro.
Underneath the red box, there is a notice: “You will be charged $5.99 per month
by joining Streamlabs Pro …. Click here for more information.” The $5.99 charge
and the notice have smaller and lighter font than the bolded font used for the
donation amount. It does not say the charge will be renewed automatically each
month until the viewer cancels the subscription. If viewers click “Click here
for more information,” the resulting page “explains the benefits, monthly cost,
[and] cancellation and refund policy of Streamlabs Pro subscription[s],” but it
does not explicitly “disclose that Streamlabs will keep charging Streamlabs Pro
subscribers $5.99 per month on their credit or debit cards until the
subscribers cancel the plan.”
The plaintiff did not discover her recurring monthly charges
for ten months, when PayPal emailed her about them. She “did not even have an
account with Streamlabs at the time.” She created an account with the email
linked to her PayPal account to try to cancel the subscription, but “she could
not find a way to cancel the subscription.” Eventually, a Streamlabs
representative responded that they would cancel her Streamlabs Pro account,
refunded her $5.99 for the most recent subscription month, and refused to
refund the rest. The representative also said that “to avoid being
automatically signed up for Streamlabs Pro, she should ‘make sure to not toggle
on Pro effects or GIFs’ when she donates.”
The complaint further alleged that, by “at the latest[ ]
early 2019,” Streamlabs knew about consumer complaints from threads on Twitter,
Reddit, and YouTube where customers complained about their unknowing enrollment
in the subscription service and Streamlabs’ refusal to contact them about
refunds and cancellation of the subscriptions. E.g., one person complained they
were charged for two months for “unk[n]owingly [ ] being a Streamlabs Pro
member. I didn’t even know it existed at all?! All I have been using Streamlabs
for so far has been opening it up, and starting streams. Not even click[ing]
anything that allowed me to be charged.” (The court discusses several other such statements as well.)
It is plausible that a reasonable
consumer (including tech-savvy consumers) could be deceived by the process
illustrated in the Statement and conclude that the $5.99 per month fee was a
one-time fee. The disclosures did not say that the fee was an automatic monthly
fee. There is evidence of actual consumer confusion, by the plaintiff and the
consumer reviews. Similarly, for the standalone fraud claims, the allegations
are sufficiently specific that Streamlabs’ process misled consumers that the
$5.99 per month fee was a one-time donation, not an automatic monthly fee.
The complaint also plausibly pleaded UCL unfairness. Under
the balancing test used in consumer cases, the court “must weigh the utility of
the defendant’s conduct against the gravity of the harm to the alleged victim.”
The complaint sufficiently alleged that the deception about the subscription
outweighs its benefits, given that consumers “don’t believe they are enrolled
in and, therefore, don’t use” the subscription. The court allowed her to plead
the equitable UCL claim in the alternative to her money damages claim.
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