On October 18, the CFPB sued a software company for utilizing their online payment platform to enroll unknowing consumers into 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 enroll in free trials and converted the free trials into annual subscriptions through a “negative option” renewal policy (our sister blog covered “negative option” marketing in a previous post here). During this process, the company allegedly collected consumers’ registration information and consumer payments data (e.g., credit or debit card number) so that it could transmit the consumer payments data through its payments systems. 

CFPB’s complaint alleges that during that registration and payment process, after the consumer has entered their payment information, the software company inserts a webpage with a button labeled “accept,” which enrolls consumers in their annual subscription, a discount membership club. However, the complaint alleges that many consumers click on the accept button, believing it is related to accepting the charges for the event, and erroneously enroll in the annual subscription.

According to a statement by CFPB Director Rohit Chopra, the Bureau is “closely watching whether financial services firms are deploying digital dark patterns,” and is “looking at a range of ways to reduce unwanted junk fees.” He also added that the CFPB is “working to ensure our payments system is working safely and fairly” and that it “will continue to look at how payment platforms extract data and fees from their users.”

Putting it into Practice: This suit illustrates the CFPB’s continued efforts to monitor and eliminate the utilization of digital dark patterns. As evidenced, third party vendors and payment platforms should refrain from using deceptive acts and dark patterns to take advantage of consumers.