ABCmouse Pays $10 Million to Settle FTC Enforcement Action

Robinson+Cole Data Privacy + Security Insider
Contact

On September 2, 2020, Age of Learning, Inc. (operating as ABCmouse), a children’s online educational company, settled with the Federal Trade Commission (FTC) for $10 million for its alleged misrepresentations and failure to disclose important information to consumers.

The FTC’s complaint alleged that ABCmouse unfairly billed users without their authorization and also made it very difficult to cancel memberships. Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, said, “ABCmouse didn’t clearly tell parents that their subscriptions would renew automatically, and then the company made it very difficult for them to cancel. People are relying more than ever on remote learning and other online services, and companies need to be up-front about automatic renewals and get permission before charging customers.” This is certainly a warning for other online educational companies operating during the pandemic – transparency is key.

ABCmouse records between 2015 and 2018 indicate that hundreds of thousands of consumers who attempted cancellation nevertheless remained subscribed and billed.

In addition to the $10 million penalty, the settlement order requires ABCmouse to:

  • Stop making any misrepresentations related to negative options (i.e., that a good or service is “free,” “trial,” “sample” or “no obligation” when a consumer must act in order to avoid later charges);
  • Disclose important information to consumers when it offers negative option plans (i.e., how to cancel the plan, the total amount they will be charged if they don’t cancel the plan, and the deadlines by which they must cancel the plan);
  • Explain clearly key terms associated with negative option plan offers BEFORE they get a consumer’s billing information;
  • Obtain consumers’ informed consent BEFORE enrolling the consumer in any automatic billing programs; and,
  • Provide cancellation mechanisms for its subscriptions.

To read the full settlement order, click here.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Robinson+Cole Data Privacy + Security Insider | Attorney Advertising

Written by:

Robinson+Cole Data Privacy + Security Insider
Contact
more
less

Robinson+Cole Data Privacy + Security Insider on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.