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YMCA’s Event Registration Company ‘Tricked’ Consumers, Feds Charge

The Consumer Financial Protection Bureau (CFPB) is suing an online event registration company that has worked for the YMCA and other prominent organizations. It charges that ACTIVE Network “tricked” consumers trying to sign up for fundraising road races and other events, into enrolling into its annual subscription discount club, Active Advantage.

The CFPB’s lawsuit alleges that ACTIVE automatically and unlawfully enrolled families into its discount club by using “digital duplicity.” Consumers, many of whom just thought they were registering for a community race or event, ended up being enrolled into a costly membership club. The CFPB is suing to require ACTIVE to change this unlawful enrollment practice, reimburse consumers, and pay a penalty.

“The CFPB is suing ACTIVE Network for illegally charging hundreds of millions of dollars in enrollment fees through its use of digital dark patterns and online trickery,” said CFPB Director Rohit Chopra. “People who thought they were just signing up to run in a charity race found out too late that the company was running away with their money.”

ACTIVE Network is headquartered in Plano, Texas, and operates a payment system, used by organizers of events and activities, such as charity races and YMCA camps, to allow participants to register and pay. In 2017, it was purchased by Global Payments Inc. (NYSE: GPN) for a reported $1.2 billion.

ACTIVE collects the consumer’s registration and payment information, and ACTIVE is then compensated with a portion of the registration fees. Separately, ACTIVE operates Active Advantage, a paid membership club offering discounts for products and activities rarely related to the events consumers signed up to attend or support.

Dark patterns drive enrollments

Over the past decade, ACTIVE has driven up enrollments in Active Advantage through the use of dark patterns, the CFPB alleges. Dark patterns are hidden tricks or trapdoors that companies build into their websites to get consumers to inadvertently click links, sign up for subscriptions, or purchase products or services. Additionally, while Active Advantage memberships have a 30-day free “negative option trial membership,” negative option trial memberships automatically begin charging the membership fees at the end of the trial period.

In a recent report, the Federal Trade Commission outlined how dark patterns can be used to mislead consumers, disguise ads, make it difficult to cancel subscriptions or recurring charges, and bury junk fees. In one recent action, the FTC put companies on notice that sign-ups must be clear, consensual, and easy to cancel.

The CFPB alleges that ACTIVE violated the Consumer Financial Protection Act by enrolling consumers in and charging them for discount club memberships without their knowledge, consent, or a full understanding of the material terms of the transaction. ACTIVE had multiple opportunities to stop its illegal practices given high rates of credit card chargebacks, numerous customer complaints, and ACTIVE’s own data revealing that a significant number of consumers had been misled into Active Advantage enrollments. Nevertheless, ACTIVE continued to trick consumers with dark patterns and surprise charges.

$300 million in fees

The CFPB alleges that since July 21, 2011, ACTIVE has generated more than $300 million in fees from about 3 million Active Advantage memberships through the inserted enrollment offer. And since July 21, 2011, members who signed up through inserted offers have redeemed only a fraction of alleged membership benefits.

Two states, Iowa and Vermont, have separately sanctioned ACTIVE for violating state consumer financial protection laws. These actions resulted in settlements that only applied to the company’s enrollment schemes in those individual states.

Read the complaint.

Consumers can submit complaints about dark patterns, and about financial products and services, by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their companies have violated federal consumer financial protection laws, including through the use dark patterns, are encouraged to send information about what they know to whistleblower@cfpb.gov.

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