Apple iCloud Automatic Sign-Up and Later Charges Class Action

Apple, Inc. offers an iCloud computer data storage service, where customers can store information as an alternative to storing it on personal devices. It offers different levels of storage capacity at different prices. The complaint for this class action alleges Apple lures customers in with an initial free amount of storage, then—when they have committed photos, documents, and e-mails to the storage—they find that they must pay to keep using and adding to it.

The class for this action is all US consumers who have subscribed to the iCloud service, from May 28, 2016 to the present. Definitions of various subclasses can be found on pages 36-38 of the complaint.

Apple computers are sold with the iCloud service built in. The service is activated when users sign in with an Apple ID. Users are not given a full explanation of the service, the complaint alleges, and it is presented as a positive feature because they get 5 GB of iCloud storage for free.

The complaint alleges, “What Apple does not mention, most crucially, is that the consumer will quickly use up the free storage and will shortly need to pay a monthly fee to retain what has been stored for free. That is the plan: Apple has chosen to tell consumers about their iCloud storage only when they are approaching its limit, and by then consumers are dependent.”

Consumers are then offered paid plans, with 50 GB at 99 cents per month, 200 GB at $1.99, and 2 TB at $9.99. The complaint claims, “The average revenue per user (ARPU) is $2-3/month. For the average consumer, the cost is about $30/yr. Multiplied by 170 million users, however, the amount Apple receives for its iCloud service, annually, is $5.1 billion. The number continues to grow.”

The complaint quotes the iCloud Terms and Conditions as saying, “When iCloud is enabled, your content will be automatically sent to and stored by Apple…” It alleges that “the iCloud service stays active, continually collecting the consumer’s data unless or until the consumer takes affirmative steps to cancel the service.”

When consumers approach the 5 GB limit, Apple offers to let them “upgrade” for a price, the complaint says. “There is a link highlighted in blue to ‘Upgrade’ but there is no link, nor even small print, indicating how a consumer might go about reducing storage, so as to continue using the product as provided.”

Consumers will then get monthly bills, the complaint says, telling them “that Apple will bill the consumer each plan period until the consumer cancels ‘by downgrading to the free storage plan’ but neither provides a link nor explains just how a consumer might do that.”
The counts include violation of the California Business & Professions Code for continuous service and automatic renewal offers and unfair competition, and breach of contract, among other things.

Article Type: Lawsuit
Topic: Consumer
Tags: Automatic Subscription Renewal or Continuous Service Agreement, Unfair Business Practices, Unfair Subscription Practices