Meal box delivery giant HelloFresh has been fined $845,000 by the Auckland District Court for breaching New Zealand’s Fair Trading Act. The ruling follows allegations by the Commerce Commission that the company misled former customers during cold-call campaigns that resulted in their subscriptions being reactivated without proper consent.

Background and Charges

Between February 2022 and July 2023, HelloFresh and its third-party call centre made more than 1.2 million cold calls to former customers. Of these, over 300,000 calls were answered, and approximately 78,000 accounts were reactivated — often without the customers’ express knowledge or approval.

The Commerce Commission laid five charges under the Fair Trading Act, all of which HelloFresh later pleaded guilty to. Prosecutor Danielle Houghton said the Commission initially sought a fine of between $1.5 million and $1.6 million, citing the scale of the misconduct and its impact on consumers.

Cold Call Misrepresentation

In court, examples of recorded calls were played showing that customers were misled. In one instance, a former customer said they wanted to review the promotional details before deciding whether to order again. In another, a customer explicitly stated they did not wish to have their account reactivated, asking, “I’m not committed am I at this stage if I don’t click on anything?”

Despite these clear refusals, both accounts were reactivated.

The Commerce Commission argued that HelloFresh’s phone scripts were misleading, often framed as consumer surveys, and failed to clearly disclose that accepting a voucher would automatically restart the customer’s paid subscription.

Consumer Impact

The Commission reported receiving 424 complaints from New Zealand consumers about HelloFresh’s sign-up, reactivation, and cancellation processes. Of the reactivated accounts:

• 31.2% cancelled before receiving any meal boxes.
• 17.7% cancelled after receiving one box.
  By contrast, when the same promotion was run via email, only 3.4% cancelled before using it, indicating that the cold-call method caused more confusion and unintentional sign-ups.

HelloFresh’s Defence

HelloFresh’s lawyer Peter Hunt argued that customers were notified via SMS after reactivation, which included details about delivery and charges. He maintained,

“This was not a subscription trap. This was not an orchestrated campaign to mislead.”

Hunt acknowledged, however, that call centre management was sub-par, with “over-enthusiastic sales representatives going off-script.” He said while training materials mentioned reactivation, it was unclear whether adherence to the script was strictly enforced.

He also claimed any confusion was “short-lived and curable”, as affected customers could cancel their subscriptions easily, and refunds were readily given.

Commerce Commission’s Response

Prosecutor Houghton countered that many consumers did not receive the SMS, or ignored it because they believed their accounts would not be reactivated based on what was said during the call.

She noted that the third-party call centre in Zagreb, Croatia, handled HelloFresh’s reactivation campaign, while the growth management team in New Zealand developed the misleading script.

“It cannot blame others, whoever they may be, for inadequate guidance of call centre agents,”
Houghton said, emphasizing that HelloFresh bore full responsibility for misleading conduct.

Call centre workers were reportedly pressured to make 20 calls per hour and achieve two reactivations per hour, incentivizing aggressive sales behaviour.

Court Findings

Judge Kathryn Maxwell concluded that HelloFresh’s cold-call tactics violated the Fair Trading Act, noting that employees “glossed over customer resistance and hesitation” and used “ambiguous language.”

1. She said the company’s remuneration structure rewarded sign-ups over accuracy, contributing to the misconduct.
2. Judge Maxwell also highlighted the real harm caused, mentioning that one complainant lost money earmarked for weekly groceries, and others were referred to debt collection agencies.
3. She criticized HelloFresh’s complex cancellation process, which could not be completed via the app. Customers had to navigate an AI chatbot before being allowed to speak with a human representative.
4. Although HelloFresh claimed to issue refunds freely, the court found that only 258 of 424 complainants were refunded, showing the company failed to adequately remedy the issue.

Penalty and Mitigating Factors

Judge Maxwell set a starting point of $1.3 million, reducing it by 35% due to HelloFresh’s early guilty plea and lack of prior convictions, resulting in a final fine of $845,000. She noted the company began tracking complaints only in January 2023, suggesting the true number of affected customers could be higher.

Company’s Apology and Future Measures

Following the ruling, HelloFresh issued an unreserved apology, admitting that some customers were misled by both third-party and in-house call centres.The company said it has since implemented new compliance measures, retrained staff, and improved its oversight processes to ensure similar breaches do not occur again. It also confirmed that affected customers will receive refunds or account credits.