The $2.15 million auto-renewal settlement with California prosecutors
May 2018
Four California district attorneys accused Dropbox of violating the state's Automatic Renewal Law for its Dropbox Pro subscriptions; Dropbox settled for $2.15 million and agreed to change its renewal disclosures, without admitting liability.
What happened
California's Automatic Renewal Law, in force since December 2010, requires businesses to present subscription auto-renewal terms clearly and to obtain a consumer's affirmative consent before charging them on a recurring basis. The district attorneys of Alameda, San Diego, San Francisco, and Sonoma counties brought a consumer-protection action against Dropbox in Alameda County Superior Court alleging that it had not met those requirements.
The prosecutors alleged that for 'Dropbox Pro,' the company failed to display the automatic-renewal terms in the manner the law required and failed to obtain consumers' affirmative consent to those terms before charging them. They further alleged that for 'Dropbox for Business,' the company did not adequately notify consumers that the product was intended for organizations rather than individuals.
On 16 May 2018 the matter was resolved by a settlement totaling roughly $2.15 million: about $1.6 million in civil penalties, $450,000 set aside for consumer restitution, and $100,000 to reimburse investigation costs. Dropbox also agreed to make changes to its website's automatic-renewal disclosures. The company settled without admitting liability, and prosecutors noted it had cooperated fully in the investigation.
Impact
The settlement put Dropbox among a wave of subscription businesses targeted under California's auto-renewal statute and forced concrete changes to how it presents recurring-billing terms at signup. It also established a documented finding by public prosecutors that Dropbox's renewal disclosures had fallen short of the law's requirements — a precedent that recurs in later consumer complaints about hard-to-cancel or surprise-renewed Dropbox subscriptions.