Paul Wright of California filed a class action lawsuit on Monday alleging that satellite radio station Sirius XM misled consumers over lifetime subscriptions, says Courthouse News Service. In the suit, Wright alleges Sirius XM is applying the ‘lifetime’ condition to the lifetime of a receiver or device, such as an automobile, not the lifetime of the subscriber.
As of June 30, 2016, Sirius XM Radio had more than 30.6 million paid subscribers, adding 587,000 new subscribers in the second quarter of 2016. The quarterly financials do not state the total number of lifetime subscribers, but Wright’s lawsuit estimates tens of thousands of lifetime subscribers will be affected.
“Defendant systematically advertised and sold its lifetime subscriptions to consumers by leading consumers to believe that such lifetime subscriptions were for the lifetime of the consumer,” said Wright in the lawsuit, according to Courthouse News Service.
“However, when consumers have tried to transfer their lifetime subscriptions from one receiver to another or from one automobile to another, defendant has taken the position that the ‘lifetime’ referred to is not the lifetime of the purchasing consumer, but the lifetime of the receiver or automobile,” Wright said in the suit.
Wright bought a lifetime subscription in 2006 for $400, but did not receive a written agreement or terms and conditions at that time. His understanding was that ‘lifetime’ meant his lifetime, not the lifetime of the receiver where he listened to Sirius XM. When his Stiletto portable receiver stopped working in January 2016, he bought a new one and asked Sirius XM to transfer his subscription but the company refused.
According to the Sirius XM website, the company no longer sells lifetime subscriptions. Lifetime subscriptions are not transferrable when installed in a vehicle.
According to Sirius XM’s current Customer Agreement, a lifetime subscription “is one that continues for the life of the Receiver equipment.” Lifetime subscriptions are nonrefundable, not transferable to another person, and their ability to be transferred from one device to another depends on whether the subscription is associated with a home, portable, or dock & play receiver or whether it was installed by an automaker or auto dealer. Non-automotive receivers can be transferred up to a maximum of three times, but each transfer is subject to a transfer fee.
On Sirius’s Listener Care page, lifetime subscriptions purchased prior to June 20, 2005 can be transferred from one radio to another any number of times, subject to a $75 fee for each permitted transfer. Between June 20, 2005 and September 7, 2007, lifetime subscriptions could be transferred up to a maximum of three times, also subject to the $75 fee per permitted transfer.
On or after September 8, 2007, lifetime subscriptions associated with home, portable or dock & play radios could be transferred up to three times, but those associated with or transferred to radios installed in vehicles by automakers or auto dealers are not transferable unless the radio is stolen, accidentally damaged or defective. The page does not address whether ‘lifetime’ applies to the listener’s lifetime or the lifetime of a given device.
Based on Sirius XM’s stated policy which Wright said he never received, he should be able to transfer his lifetime subscription to a new receiver three times, but he was denied the transfer. Wright is seeking class action status, restitution, an injunction and damages for fraudulent and negligent misrepresentation, unfair competition, breach of express and implied contract, and consumer law violations, reports Courthouse News Service.
Transparency is critical for all subscription companies to avoid situations like this. We always advise subscription companies to be clear in all of their terms and conditions, so there is no question what a customer is subscribing to, what the subscriber’s obligations are, and what the subscription company’s obligations are.
There has been a lot of activity for recurring revenue businesses on the legal front, and our legal expert Lisa B. Dubrow has been writing on them for Subscription Insider. Two recent additions include:
“Legal Insider: Understanding Enforceability of Terms-of-Use and the U.S. Court of Appeals’ Amazon Ruling” and “Legal Insider: Subscription Box Julep Beauty fined by the Washington State Attorney General for its “Negative Option” Marketing Practices“