WASHINGTON—The CFPB is suing the online event registration company ACTIVE Network for “tricking” people trying to sign up for fundraising road races and other events, into enrolling into its annual subscription discount club, Active Advantage.
According to the CFPB lawsuit, 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 lawsuit seeks to require ACTIVE to change what it alleged is an unlawful enrollment practice, reimburse consumers, and pay a penalty.
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. for a reported $1.2 billion, the CFPB said.
According to the Bureau, 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, the CFPB explained.
Over the past decade, the Bureau said ACTIVE has driven up enrollments in Active Advantage through the use of dark patterns.
‘Dark Patterns’
“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,” the CFPB said. “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.”
The CFPB is alleging 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,” the Bureau stated. “Nevertheless, ACTIVE continued to trick consumers with dark patterns and surprise charges.”
Specific Allegations
Specifically, the CFPB’s lawsuit alleges that ACTIVE harmed consumers by:
- Duping event registrants into discount club memberships and sneaking charges onto users’ credit cards. “ACTIVE inserts a webpage into its online event registration and payment process that provides an offer for a free trial enrollment into Active Advantage. Many consumers click on the highlighted call to action button—which is typically labeled “Accept”—because they believe they are accepting charges to their credit or debit cards to participate in an event. In fact, ACTIVE is enrolling consumers into an Active Advantage trial membership. The trial membership automatically converts to a paid subscription, with an annual fee of $89.95, unless consumers opt out by canceling their membership during the 30-day trial.”
- Failing to notify Active Advantage members of fee increases. “ACTIVE increased their discount club’s annual membership fee without sending written notice of the new payment and the date of the new payment at least 10 days before charging members, in violation of the Electronic Fund Transfer Act and its implementing regulations.”
More Than $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, the agency said.
The CFPB said it is seeking injunctive relief, monetary relief for consumers, disgorgement of unjust gains, and a civil money penalty.
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