Dropbox settles consumer protection lawsuit

Dropbox logo courtesy of Dropbox's Facebook. 

Alameda County District Attorney Nancy O'Malley said today that San Francisco-based file-sharing company Dropbox has agreed to pay more than $2 million to settle a suit alleging that it violated California's automatic renewal law.

According to the suit, which was filed in Alameda County Superior Court by O'Malley and the district attorneys of San Francisco, Sonoma and San Diego counties, Dropbox offered paid services known as "Dropbox Pro" and "Dropbox for Business." 

The complaint says both services were available on an "automatic renewal" basis, meaning that the subscription was renewed without further action on the part of the customer until the services were cancelled.

The suit alleged that Dropbox violated the automatic renewal law with respect to "Dropbox Pro" by failing to display the automatic renewal terms in the manner required by law and by failing to get the consumer's affirmative consent to the agreement containing those terms.

The complaint alleged that "Dropbox for Business" failed to sufficiently advise consumers that the service was intended only for organizations or businesses, not consumers using it for personal, family or household reasons.

Under the terms of the court-approved judgment, $450,000 has been set aside to administer and fund restitution to qualifying California consumers.

Without admitting liability, Dropbox also agreed to pay $1.6 million in civil penalties and $100,000 to reimburse the costs of investigating the case.

To be eligible for restitution, consumers must have lived in California and purchased "Dropbox Pro" between Feb. 24, 2013, and Aug. 1, 2014, and not have used the service more than 30 days after first paying for it.

Consumers also are eligible for restitution if they purchased "Dropbox for Business" for personal, family or household reasons -- not for a business or organization -- and did not use the service more than 30 days after paying for it.

Other conditions also apply to refund eligibility.

Consumers who believe they are entitled to restitution should call 1-866-670-3373 or visit www.DropBoxRestitution.com. The restitution fund remains available for one year.

O'Malley said in a statement, "My office will remain vigilant in ensuring that California's consumer protection laws are followed, including laws intended to protect consumers who enroll in automatic renewal contracts."

She said, "This vigilance applies to companies both large and small." 

O'Malley said Dropbox cooperated fully in the investigation and agreed to make changes to its website as part of the settlement.

In a statement, Dropbox said, "We believe that our policies have been fair, transparent, and in compliance with applicable law, but we're pleased to have resolved this matter. Being worthy of trust is a core value of Dropbox and we'll continue striving to earn and maintain the trust of our