NEW YORK — Is the home of Howard Stern and a collection of commercial free subscription-based audio offerings including curated channels from John Mayer and Kelly Clarkson duping customers into paying a “royalty fee” they’re unaware of?
That’s a question an Oregon Federal District Court judge will seek to answer, courtesy of a proposed class action lawsuit filed on behalf of four individuals.
The Sirius XM customers — Kara Kirkpatrick, Gillian Maxfield, Anna DeMarco, and Cody Michael — are represented by Bellevue, Wash.-based Hattis & Lukacs’ Che Corrington.
In the complaint, filed June 14, the plaintiffs seek to establish that Sirius XM Radio Inc. seeks a 21% surcharge on each month’s billing statement, calling this a hidden “royalty fee.”
The Oregon legal action comes after Letitia James, the Attorney General for the State of New York, in late December 2023 sued the publicly traded company following an investigation that found SiriusXM “forces” its subscribers to call or chat online with an agent to cancel a subscription, and then deliberately draws out those interactions as part of its strategy to prevent subscribers from canceling.
This matter is wholly different, and seeks to tie the “royalty fee” to the company’s recent financial performance. In Q1 2024, total revenue improved to $2.162 billion from $2.144 billion on the strength of advertising revenue and, to a lesser extent, equipment revenue. Subscriber revenue slipped to $1.68 billion from $1.691 billion.
That performance could have been worse, had it not been for fees the plaintiffs claim ballooned their advertised monthly charges in violation of the Oregon Unlawful Trade Practices Act.
Oregon does not have a state sales tax, and this extends to the online universe. As such, services such as Spotify that advertise a $14.99 monthly rate bill exactly that, whereas in areas such as Florida the local sales tax and other fees are added on to the monthly statement.
For these Sirius XM customers, the issue is a “U.S. Music Royalty Fee” the company is passing on to them. This increases the advertised rate by some 21.4% and, the customers claim, is “invented” by the satellite radio company to ensure it retains profitability.
While that argument may not stand in court, the bigger issue lies in the plaintiff’s claim that the fee is not clearly stated as a line-item add-on, only that “fees and taxes apply” in a Sirius XM disclaimer.
“Once consumers have been lured to sign up, Sirius XM prevents them from learning about its scheme by never thereafter sending them monthly or ongoing billing notices or invoices,” the lawsuit says. “All the while, Sirius XM silently and automatically renews their subscriptions month after month and year after year.”
What do the plaintiffs seek? Proper disclosure of the fee, along with a $200 credit for each member of the class action suit. There’s also a request for punitive damages, fees, costs and a jury trial.
