On October 18, the CFPB sued a software company for using its online payment platform to sign up oblivious consumers for annual subscriptions through deceptive acts and “dark pattern” techniques in violation of the CFPA and EFTA. Among other things, the complaint alleges that the company encouraged consumers to unknowingly sign up for free trials and converted free trials to annual subscriptions through a “negative option” renewal policy (our sister blog covered the “negative option” marketing in a previous article here). During this process, the company would have collected consumer registration information and consumer payment data (e.g. credit or debit card number) so that it could transmit consumer payment data through its payment systems.
The CFPB complaint alleges that during this registration and payment process, after the consumer enters their payment information, the software company inserts a webpage with a button labeled “accept”, which registers the consumers in their annual subscription, a discounted membership club. However, the complaint alleges that many consumers click the opt-in button, believing it to be tied to accepting event fees, and mistakenly sign up for the annual subscription.
According to a statement from CFPB Director Rohit Chopra, the Bureau is “closely monitoring whether financial services firms deploy digital dark schemes” and “investigating a range of ways to reduce unwanted junk fees.” He also added that the CFPB is “working to ensure that our payment system operates in a safe and fair manner” and will “continue to review how payment platforms extract data and fees from their users.”
put into practice: This combination illustrates the CFPB’s ongoing efforts to monitor and eliminate the use of digital dark patterns. As evidenced, third-party providers and payment platforms should refrain from using deceptive acts and shady schemes to take advantage of consumers.
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