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Financial Services Law Insights and Observations

FTC increases dark patterns enforcement

Federal Issues FTC Robocalls Enforcement Privacy/Cyber Risk & Data Security

Federal Issues

On October 28, the FTC announced a new enforcement policy statement warning companies against using illegal dark patterns that could “trick or trap consumers into subscription services” which are sometimes used by sellers in automatic renewal subscriptions, continuity plans, free-to-pay or free-to-pay conversions, and pre-notification plans. According to the FTC, the agency is enhancing its enforcement due to increasing complaints about the financial harms caused by deceptive sign-up tactics, including unauthorized charges or continuous billing that is impossible to cancel. The policy statement, among other things, “puts companies on notice that they will face legal action if their sign-up process fails to provide clear, up-front information, obtain consumers’ informed consent, and make cancellation easy.” According to the enforcement policy statement, businesses are required to follow three requirements, or be subject to law enforcement action: (i) disclose clearly and conspicuously all material terms of the product or service; (ii) receive the consumer’s express informed consent prior to charging them for a product or service; and (iii) provide easy and simple cancellation to the consumer.

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