On November 3, the FTC and a software company operating internet-based telephone services filed an agreed upon proposed court order, which includes a $100 million fine, following an FTC suit alleging that the software company participated in illegal dark patterns and charged junk fees. In its original complaint, the FTC alleged that the software company provided simple ways to sign up for their phone plans, but made it difficult to cancel those plans, and harmed consumers by:
On October 18, 2022, the CFPB sued a software company that manages online payment platforms claiming that it utilized unlawful enrollment practices to cause unknowing consumers to automatically enroll in annual subscriptions. According to the CFPB, the software company generated over $300 million in fees from approximately three million consumers through engagement in deceptive acts and “dark pattern” techniques in violation of the CFPA and EFTA by:
Continue Reading CFPB Sues Payment Platform as the Crack Down on Dark Patterns Continues
On September 15, the FTC released a report, Bringing Dark Patterns to Light, that shows an increase in the use of sophisticated “dark pattern” design practices by retailers intended to manipulate consumers into making decisions that benefit the retailers at the consumers’ expense. The report examined the use of dark patterns across a variety of industries and contexts, including e-commerce, cookie consent banners, children’s applications, and subscription sales. The report highlighted four common tactics:
Continue Reading FTC Reports Rise in “Dark Pattern” Tactics in Consumer Markets
On October 28, the FTC issued a new enforcement policy statement warning companies against deploying “illegal dark patterns” that trick or trap consumers into subscription services, and often making websites difficult to navigate to find cancellation or refund options. The statement is intended to assist marketers by providing specific guidance on the FTC’s interpretation of existing law as it applies to “negative option marketing” through deceptive sign up tactics, including unauthorized charges or ongoing billing that is impossible to cancel. The policy statement notes that “[n]egative option offers come in a variety of forms, but all share a central feature: each contains a term or condition under which the seller may interpret a consumer’s silence or failure to take affirmative action to reject a good or service or to cancel the agreement as acceptance or continuing acceptance of the offer.” Examples include automatic renewals, free trials that convert to pay features, and continuous periodic shipments that continue until the customer cancels the shipment. Continue Reading FTC to Increase Enforcement Against “Dark Patterns” Directed at Consumers
On November 2, the FTC entered into a settlement agreement with a Manhattan-based fintech company for $18 million over alleged deceptively marketed cash advances to consumers and impeding customers’ ability to cancel memberships. The FTC alleged that the fintech company violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
Continue Reading FTC Settles with Fintech for $18M over Deceptive Cash Transfers and Difficult-to-Cancel Memberships
On April 4, CFPB Director Rohit Chopra delivered remarks at the International Association of Privacy Professionals’ Global Policy Summit on the importance of reigning in repeat violators of consumer finance and privacy laws. According to the Director, the CFPB is to enhance penalties against repeat offenders of consumer protection laws. Such penalties could involve a broader range of agency remedies, including naming executives in enforcement actions and placing meaningful limitations on future business practices, in addition to simple fines.
Continue Reading CFPB Director Elevates Priorities for Data Privacy & Repeat Offenders
On April 3, the CFPB issued a policy statement explaining the legal prohibition on “abusive” conduct in consumer financial markets provided in the Consumer Financial Protection Act (CFPA) and provided a summary past enforcement where these provisions have been applied.
Continue Reading CFPB Issues Guidance on “Abusive” Conduct in Financial Markets
On January 19, the CFPB issued Circular 2023-01 to affirm that companies offering “negative option” subscription services are required to comply with federal consumer financial protection laws. According to the Circular, “negative option” refers to a term or condition under which a seller may interpret a consumer’s silence, failure to take an affirmative action to reject a product or service, or failure to cancel an agreement as acceptance or continued acceptance of the offer (see our previous blog posts on negative option marketing here and here). The CFPB warns that negative option marketing practices may violate the prohibition on unfair, deceptive, or abusive acts or practices in the CFPA where a seller:
Continue Reading CFPB: Negative Option Marketing Practices May Violate CFPA
On December 1, the CFPB and a financial services company filed a stipulated proposed court order seeking the resolution of a CFPB suit alleging that the financial services company made false, misleading, and inaccurate marketing representations to consumers regarding its “high yield” savings account offering. In its original complaint, the CFPB alleged that the financial services company engaged in four separate false representations to consumers in violation of the CFPA:
Continue Reading CFPB Targets Financial Services Company for Deceptive Advertising
On September 1, the FTC issued an administrative complaint and consent order alleging that a credit services company harmed consumers by making false claims of “pre-approved” credit offers, enticing many consumers to apply for offers they ultimately did not qualify for and unnecessary credit checks.
Continue Reading FTC Targets Credit Services Company For False “Pre-Approved” Credit Offers