On October 18, 2022, the CFPB sued 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, ACTIVE automatically and unlawfully enrolled families into its discount club by using digital duplicity.
From CFPB Director Rohit Chopra’s statement:
“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. 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 operates a payment system, used by organizers of events and activities to allow participants to register and pay. ACTIVE is paid to collect the consumer’s registration and payment information. In addition, the company operates Active Advantage which is a paid membership club offering discounts for products and activities rarely related to the events consumers signed up to attend or support.
According to the CFPB, ACTIVE has driven up enrollments in Active Advantage through the use of dark patterns. Dark patterns work in such a way that consumers inadvertently click links, sign up for subscriptions, or purchase products or services on a certain website. In addition to this trick, Active Advantage employs membership programs that have a 30-day free “negative option trial membership” which automatically begins charging the membership fees at the end of the trial period.
The CFPB alleges in its lawsuit against ACTIVE that the company enrolled consumers in and charged them for discount club memberships without their knowledge, consent, or a full understanding of the material terms of the transaction. In particular, the CFPB’s lawsuit alleges that ACTIVE harmed consumers by:
Duping event registrants into discount club memberships and sneaking charges onto users’ credit cards; and
Failing to notify Active Advantage members of fee increases.
Based on the complaint, ACTIVE has generated more than $300 million in fees from about 3 million Active Advantage memberships through the inserted enrollment offer since July 21, 2011. Additionally, members who signed up through inserted offers have redeemed only a fraction of alleged membership benefits. The CFPB is suing to require ACTIVE to change this unlawful enrollment practice, reimburse consumers, and pay a penalty. The Bureau is also seeking injunctive relief, monetary relief for consumers, disgorgement of unjust gains, and a civil money penalty.
Read the CFPB’s press release here.
The CFPB’s complaint against ACTIVE NETWORK, LLC, can be found here.