Offering lifetime subscription terms carries some true risks. What does “lifetime” mean? Since a subscription provides access to a product, and sometimes, free updates or other benefits as the product or technology evolves, an understanding of the actual length of a term is a material term of a contract between a merchant and consumer.
Limiting the definition of “lifetime” in your contract with consumers or disclaimers might not be sufficient. In a false advertising claim, it is not always what is literally disclosed but the overall impression you provide to a consumer that is paramount. Therefore, what you mean by “lifetime” is critical and must be clearly and conspicuously conveyed prior to a purchasing decision being made.
Is lifetime the lifetime of the product or the customer? Is it transferrable? What obligations does it impose on the merchant? What obligations does it impose on the consumer?
When it comes to a SiriusXM device, “lifetime” evolved and after a point in time such subscriptions were sold where the term presumably meant the lifetime of the device for your built-in car radio, and it was transferrable if you had another portable radio. However, a customer who bought his lifetime subscription to satellite radio service SiriusXM over the phone says that he wasn’t told that the subscription was for the lifetime of the device. Without restrictions being properly conveyed, the subscriber was naturally led to believe that the subscription was for his lifetime.
In the class action complaint against SiriusXM, the defense argued that customers buying lifetime memberships were gambling on the continued existence of the satellite providers.
“Purchasers of the lifetime subscriptions took a chance and paid large, upfront, lifetime subscription fees to Defendant with no guarantee that Defendant would survive as an ongoing business,” the complaint explains, “but in the hope that if Defendant did survive, their lifetime subscription purchase would pay off over time.”
SiriusXM’s Customer Agreement, currently found on its website, SiriusXM.com, discloses that SiriusXM, indeed, had previously sold lifetime subscriptions but that those plans are no longer available. It goes on to disclose nuances about the “lifetime subscription” term and does convey that the term continues for the life of the designated radio and for so long as the same consumer owns that radio and not the lifetime of the subscriber. In addition, the transferability between radios is dependent on the type of radio and, in some instances, is limited to three transfers with an additional transfer fee.
According to the Customer Agreement accessible on its website, SiriusXM lifetime subscriptions purchased before June 20, 2005, could be transferred to new devices indefinitely, We can assume that the offers for lifetime subscriptions after that date did disclose what was meant by a lifetime subscription, but the class action defendant alleges he was not aware and, depending on the type of disclosure and where that disclosure was made, the court might have felt that those terms were not adequately disclosed in such a way as to negate the overall impression left by the term “lifetime.”
Well, after two-and-a-half years of litigation, the parties appear ready to settle and a California federal judge was recently asked to sign off on a settlement to resolve the class action claims that the satellite radio company failed to honor the lifetime subscriptions it sold to customers.
The settlement proposes that, among other things, lifetime subscriptions can be transferred to an indefinite number of devices, and the transfer fees imposed will be significantly reduced. In addition, either inactive lifetime subscriptions should be reinstated, or the consumers affected can receive $100 cash.
Plaintiffs filed a motion for preliminary approval of the class action settlement on June 11, 2020 which states that approximately 964,000 individuals will be affected by this settlement, and proposing a settlement valued at $96.4 million, which does not include any amounts paid for notices and administration, service payments, attorneys fees and expenses.
Takeaway: Whether you offer a lifetime subscription or make other claims that can carry inherent implied claims or promises, ensure that any limitations or restrictions are clearly and conspicuously disclosed at the time of sale.
