On April 25, the FTC took action against a Washington-based bill payment company and its two co-founders alleging that the company used misleading search ads to impersonate consumers’ billers and deceptive design practices to mislead those consumers into paying “junk fees” they tacked on to consumers’ bills.
In a complaint filed in the Western District of Washington, the FTC alleged that the company employed misleading “dark pattens” to manipulate consumers into using their platform under the mistaken belief that they had reached their biller’s official payment site. Once on the false site, the bill payment company would charge “junk fees” in connection with the processing of payments. The FTC also claimed defendants violated the Restore Online Shoppers’ Confidence Act by charging consumers for goods or services before clearly and conspicuously disclosing all materials to the transaction, and obtaining the consumers’ informed consent, as well as deceptively enrolling consumers into a paid subscription service. The FTC also alleged that the company caused consumers to incur late fees by failing to make timely payments to the consumers’ billers despite having received on time payments from the consumer. Finally, the FTC also alleged defendants used fraudulent statements and representations to obtain consumer information such as bank account numbers, in violation of the Graham-Leach-Blilely Act.
Putting It Into Practice: As we have previously reported, this settlement underscores the FTC’s continue push to tackle the use of dark pattern techniques to manipulate consumer activity through confusing and misleading enrollment and cancellation processes (see our previous blog posts here, here, here, here, and here, as well as our webinar titled “Who Turned Out the Lights?: FTC Steps Up ‘Dark Patterns’ Enforcement of Retailers” on this topic). Companies that utilize subscriptions programs, especially those that operate with negative renewal or negative option plans, should ensure that they are providing clear disclosures to consumers wishing to enroll, alter or cancel their services.
