Indianapolis-based Angie's List Inc. will pay $2.8 million to settle a lawsuit alleging that it automatically renewed members at a higher rate than they were led to believe.
U.S. District Court Judge Jane Magnus-Stinson approved the settlement on Monday. She estimated the value to plaintiffs in the class-action suit at $2.83 million, according to court documents. That figure includes $672,636 Angie’s List is to pay for plaintiffs’ legal fees.
IBJ reported in February that the parties had reached a tentative settlement of the 2012 lawsuit. The tentative agreement prompted Angie’s List in the fourth quarter of 2013 to set aside $4 million to cover the anticipated costs.
In late 2012, Philadelphia resident Marie Fritzinger filed a suit seeking class-action status that accused the contractor-reviews company of “systematic and repeated breach” of its membership agreement.
Members provide a credit or debit card that Angie’s List keeps on file to allow for automatic renewal. The suit alleged Angie's List misrepresented the terms of renewing memberships, and charged more costly rates than members were led to believe.
Fritzinger also alleged that longer-tenured members were hurt by a 2010 change in 30 of the company's most-mature markets. Members would be allowed to select one of three categories to access—auto service providers, home contractors or health care providers—or purchase a bundled premium membership for all three categories.
She alleged the company renewed more-tenured members at the higher rate, without notification.
Angie's List disputed the allegations.
"Angie’s List prides itself on providing excellent member service and denies that any of Fritzinger’s allegations are true," company spokeswoman Cheryl Reed said Tuesday. "Angie’s List entered into this settlement to ensure that it could continue to dedicate its full resources to delivering great service to its members, rather than to costly litigation.”
The settlement covers more than 1.1 million current and former members of Angie’s List, according to court documents. The class members were given the opportunity to choose between a $5 cash payment, a one-month membership, or a $5 e-commerce voucher.
Class members who did not respond to the offer automatically will be given either a one-month membership extension or a $5 e-commerce voucher.
In the second quarter of this year, Angie's List reported that it had 2.8 million members nationwide.
Fritzinger was represented Richard Shevitz, a partner in Indianapolis-based Cohen & Malad LLP. He was not immediately available for comment Tuesday morning.