Drawing from the Federal Trade Commission's recent policy statement and its own past enforcement actions, the Consumer Financial Protection Bureau issued a new circular for companies offering negative option subscription services, that highlights examples of unlawful behavior by companies that have used dark patterns and other manipulative tactics to trick consumers into paying recurring charges for unwanted products and services. The two agencies are partnering in efforts to combat dark patterns and expressed their commitment to bringing action where necessary.
According to the CFPB, negative option marketing practices may violate the law if they do not clearly and conspicuously disclose material terms, fail to obtain consumers' informed consent, or make it unreasonably difficult for consumers to cancel services.
The circular emphasizes that such practices may be particularly harmful when paired with digital dark patterns — or, "design features used to deceive, steer, or manipulate users into behavior that is profitable for a company, but often harmful to users or contrary to their intent" — because consumers may be misled into purchasing subscriptions and other recurring services and be unable to cancel the services or avoid recurring charges.
The circular provides in-depth guidance on disclosure, consent and cancellation, and draws from past CFPB enforcement cases to highlight relevant examples, including its action against Transunion for violating a consent order and for deceptive marketing, including digital dark patterns, when selling credit scores, reports and other credit monitoring products; its suit against ACTIVE Network for tricking consumers into enrolling in a costly membership club through the use of dark patterns; and its consent orders with numerous credit card issuers for deceptively marketing optional "add-on" products that charged recurring fees until consumers affirmatively cancelled.
"Consumers shouldn't have to jump through hoops to cancel subscriptions they don't want, and they shouldn't have to worry about a trial marketing offer turning into an unwanted monthly charge," said CFPB Director Rohit Chopra. "The CFPB has made it clear that misleading consumers about products or subscription services they don't want is not only dishonest, but also a violation of law."
"Deceptive practices that seek to trap consumers into subscriptions they don't want are a violation of the law," added Samuel Levine, Director of the FTC's Bureau of Consumer Protection. "[The CFPB's] circular puts companies on notice that there is a government-wide effort to stop these manipulations."
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