CFPB Sues Payment Platform Used by YMCA Camps and Charity Race Organizers for Illegally Cramming Consumers With Junk Membership Fees

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (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. The CFPB’s lawsuit describes how 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 to Drive Up Enrollments

Over the past decade, ACTIVE has driven up enrollments in Active Advantage through the use of 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. 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. 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.

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.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against companies that violate consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts or practices. The CFPB is seeking injunctive relief, monetary relief for consumers, disgorgement of unjust gains, and a civil money penalty.

The complaint is not a final finding or ruling that the defendants have violated the law.

Read today’s complaint.

Read Director Rohit Chopra’s statement on the complaint against ACTIVE.

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.

The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.