WHOOP agrees to $11 million settlement over subscription renewals

WHOOP has agreed to an $11 million settlement in a California class action over the way it disclosed automatic membership renewals. The case has been running for nearly three years, although the settlement still needs court approval and does not amount to a finding that WHOOP broke the law.

If there is one thing you cannot really separate from WHOOP, it is the subscription. The tracker and membership have always been tightly linked, so a legal fight over how those memberships renew cuts to the heart of the business.

The proposed settlement comes from a class action brought by California customer Donrick Sanderson. It covers people in California who bought WHOOP memberships through the company’s website, were enrolled into automatically renewing memberships and were subsequently charged for at least one renewal after their initial membership or commitment period ended.

According to an October 29 federal court filing, WHOOP has agreed to put $11 million into a settlement fund to compensate customers. How much each person receives will depend on how many eligible customers ultimately make a claim.

The argument was about how WHOOP explained renewals

Sanderson alleged that WHOOP’s checkout process did not adequately comply with California’s Automatic Renewal Law. Among other things, the law requires businesses to make certain recurring-payment terms clear when customers agree to a subscription.

A July federal court ruling examined a WHOOP checkout page where the automatic-renewal disclosure appeared underneath the “Place Order” button. The disclosure told customers that WHOOP could charge their credit card annually when the membership renewed.

The plaintiff argued that this information was not displayed prominently enough and did not adequately explain some of the important renewal terms. WHOOP disagreed and maintained that its checkout disclosures, order confirmations and renewal communications properly informed customers about what would happen.

The dispute also extended to WHOOP’s renewal emails.

Now let’s make this clear. The court did not decide that WHOOP had violated California law. In July, the judge declined to grant summary judgment to either side on the remaining damages claim, concluding that factual questions still needed to be resolved.

The $11 million figure is not insignificant

The two sides then went to mediation in July and subsequently reached a settlement in principle. They signed the longer settlement agreement on October 23.

The scale is worth putting into context. The $11 million fund represents around 39% of the $28.2 million in full-refund damages the plaintiff had been seeking for the claims covered by the settlement, according to the court filing.

The federal case was dismissed without prejudice on October 29 so that approval of the complete settlement can be handled through the related California state court action. If the settlement fails to receive final approval, the federal case can be reopened and return to the position it occupied before the dismissal.

So this is not quite finished yet. There is an agreement between the two sides, but a court still needs to approve it before the settlement takes effect.

Our takeaway

Whoop’s entire proposition has been built around membership. That recurring cost is an important difference between WHOOP and many newer screenless trackers. Fitbit Air, Garmin CIRQA, Amazfit Helio Strap, Polar Loop and Speediance Strap all approach the screenless wearable idea differently, and most avoid making a permanent paid membership a requirement.

That does not make WHOOP’s model inherently worse. Its recovery, Strain and sleep platform remains one of the most developed in this part of the market, which is why the subscription still makes sense for people who use those tools.