RealNetworks Settles Unfair Marketing Claim for $2.4M

5/24/12Follow @curtwoodward

Seattle’s RealNetworks (NASDAQ: RNWK) has agreed to pay $2.4 million to settle a lawsuit over deceptive marketing practices that Washington state’s attorney general says duped consumers into expensive monthly subscription fees.

Most of that money—$2 million—goes into a pool for paying restitution to consumers. People who think they were improperly billed by the company can file a claim for repayment. The balance of the money goes to pay for attorney’s fees.

State Attorney General Rob McKenna—also the Republican candidate for governor—said the problems stemmed from free trials of products or services that quickly or deceptively signed consumers up and then switched them over to paid versions. McKenna also said consumers complained that it was very difficult to get RealNetworks to stop any monthly charges. The state attorney general enforces Washington’s consumer protection laws, and fields complaints from consumers.

RealNetworks’ new president and CEO Thomas Nielsen, who is attempting a turnaround at the company, noted in a statement that Real had previously stopped employing “the practices at the heart of this matter.” While Real disagreed with the entirety of McKenna’s legal complaint, the company said “we acknowledge that some aspects of RealNetworks’ e-commerce practices were not what our customers expected of us,” Nielsen said in a statement.

McKenna said Real’s changes had decreased the volume of complaints to his office. The restitution pool covers people charged from 2007 to 2009. Consumers can register a claim at realnetworksrestitution.com.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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