Noom, Inc. has agreed to pay $62 million to settle a class action lawsuit from former customers who allege that the weight loss app provider lured them into "risk-free" trial periods and then continued to charge them hefty, automatic renewal fees that were tough to cancel.
The company denies any wrongdoing, and the settlement still has to be approved by the U.S. District Court in the Southern District of New York.
The plaintiffs accuse Noom of collecting nonrefundable renewal payments for its Healthy Weight Subscription as long as eight months beyond the expiration of the trial, tallying as much as $199 for individuals.
As part of the preliminary deal, Noom has agreed to now send email reminders to customers ahead of the expiration of their trials, and to make it easier to cancel subscriptions both on their mobile app and website.
Noom co-founders Saeju Jeong and Arten Petakov posted a joint message on the company's blog on Monday acknowledging the agreement that was filed Friday, saying, "While we disagree with the claims made in the suit, we believe the settlement is the best path forward as it allows us to focus our energy on delivering the best possible health outcomes for our Noomers."
The founders noted that not only has Noom made changes that allow easier cancellations over the past 18 months, the company has also bolstered its customer service team, simplified its pricing, and clarified subscription details.
Reuters contributed to this report.