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:

• inserting a webpage into the registration and payment process that asked customers to click on an “accept” button without adequate information on what they were accepting;

• conducting marketing tests and making calculated design choices in order to manipulate consumers into enrolling in the annual subscription without their knowledge;

• maintaining a “negative option” renewal policy on its’ annual subscription, so that the subscription automatically renewed each year unless consumers took affirmative action; and

• converting the consumers free trial into an annual subscription through the negative option renewal policy, causing such consumers to pay the annual fee without their knowledge or intent.

The CFPB’s complaint requests that the court grant, among other things, the following forms of relief: (i) permanently enjoin the software company from committing future CFPA and EFTA violations; (ii) award relief as the court finds necessary to address the consumers’ injury, including but not limited to: refunds, restitution, compensation, and payment of damages, (iii) impose a civil money penalty against the software company; and (iv) order the software company to pay the CFPB’s costs incurred with the prosecution.

The CFPB Director, Rohit Chopra, issued a statement at the time of suit, highlighting the focus points of the CFPB that are pertinent to the case, including (i) closely watching financial services firms utilizing digital dark patterns; (ii) reducing unwanted fees for unwanted services that provide no value to consumers; and (iii) ensuring payment platforms are working safely.

Putting it into Practice: As we’ve previously reported, this suit illustrates an issue that both the FTC and the CFPB have made an effort to monitor and eliminate: the utilization of digital dark patterns, which generally refer to manipulative website designs that target consumer behavior (see our previous blog posts here and here). In this case, Director Chopra also pointed to the specific importance of safeguarding payment platforms. Consumer-facing software companies, particularly those operating or utilizing payment platforms, should review the complaint and press release and ensure their webpages do not use such tactics.