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Following an ACM investigation, Pharmaxx has stopped its customer-recruitment activities

The Netherlands Authority for Consumers and Markets (ACM) will end its investigation into the sales practices of Pharmaxx because it recently stopped its customer-recruitment activities. In addition, Pharmaxx promised to compensate part of its customers. In the Netherlands and Belgium, Pharmaxx sold subscriptions to vitamin pills online, and, in Belgium, also over the phone. Online consumers were invited to fill out ‘health surveys’. In return, they received a first shipment of vitamin pills, and only needed to pay an administrative fee of 5 euros. However, they automatically received quarterly follow-up shipments of 60 euros per shipment if they had not cancelled the subscription on time. Pharmaxx had failed to inform consumers who received the introduction package clearly that they were actually taking out a subscription to follow-up shipments.

Edwin van Houten, Director of ACM’s Consumer Department, explains: “Consumers must be able to trust the offers they are getting. If you receive a trial product, you cannot be stuck with a subscription. If a consumer takes out a subscription, they will have to be properly informed in advance, and thus know what the costs are. They will only be bound by a subscription if they have knowingly agreed to one.”

What was this case about?

The Belgian consumer authority had filed a request for enforcement action against Pharmaxx (a Dutch company) with ACM. Pharmaxx sells health products online and over the phone. Consumers were not properly informed that they were taking out subscriptions to follow-up shipments containing vitamin pills at 60 euros per quarterly shipment. If they did not pay for the follow-up shipments, they would have to deal with a debt collection process. This happened in particular in Belgium but also in the Netherlands.

ACM subsequently launched an investigation into the sales practices of Pharmaxx, in which several possible violations were found. This resulted in Pharmaxx indicating in late 2022 that it would end its recruitment activities of new customers, both in the Netherlands and Belgium. Moreover, Pharmaxx promised ACM to give consumers who in 2022 filed a formal complaint their money back. In addition, it will also void the invoices for customers who refused to pay for their trial packages in 2022 after which they ended up in a debt collection process. That is why ACM will end its investigation, and will check whether Pharmaxx keeps its promises.

Trial packages to lure consumers in

Ads and websites for so-called ‘free’ products and services are often misleading. Essential information regarding follow-up shipments and costs is only mentioned in the small print. In addition, it is often unclear how you can avoid expensive follow-up shipments or paid subscriptions. This is not allowed. Consumers are only bound by subscriptions if they have knowingly said ‘yes’ to them. If consumers are sent something or given a service they do not want, they can keep it and use it without having to pay for it. Unfortunately, not many consumers know this. They are unsure about their rights, and are pressured to pay anyway.

Prorection of the online consumer

The digital economy is one of ACM’s key priorities in 2023. Consumers must be able to make online purchases with confidence. ACM has many different instruments at its disposal for solving consumer problems. In this case, ACM prefers to call on the company directly to solve the problem. In other situations, ACM may, following an investigation, choose to impose a fine or an order subject to periodic penalty payments.