On January 23, the FTC entered into a settlement agreement with a cash-advance fintech app for $3 million over violations of the FTC Act, the Restore Online Shoppers’ Confidence Act (ROSCA), and ECOA.

The FTC’s complaint alleges that the company and its founders lured consumers into paying $1.99 to download its app based on the promise that consumers could then access up to $50 in cash advances immediately as part of their membership. Despite these claims, when consumers signed up, they were only able to access $20 in advances and were charged a $4 fee to receive that amount “instantly.” The complaint also charges that the company used “dark patterns and other tricks” to make it difficult for customers to cancel their subscriptions.

The company was also charged with illegally discriminating against consumers who receive public assistance. The FTC alleges that the company failed to consider any income received through a public assistance program in determining whether a consumer was eligible to receive an advance, and it declined advances to consumers whose income came from public assistance. Despite this, the company still charged these consumers for its monthly subscription fee, even though they could not receive the services offered by it.

The settlement agreement requires the company and its co-founders pay $3 million to the FTC to be used to provide refunds to consumers. It also prohibits them from deceiving consumers about their products, requires them to get consumers’ express, informed consent for charges, and provide an easy method for cancellation. The order also prohibits the defendants from deploying discriminatory practices and requires them to enact a fair lending program.

Putting it into Practice: As we have previously reported, this settlement illustrates an issue that the FTC is working to eradicate: the use of dark pattern techniques to manipulate consumer activity through confusing and misleading cancellation processes (see our previous blog posts here, here, here, and here, as well as our webinar titled “Who Turned Out the Lights?: FTC Steps Up ‘Dark Patterns’ Enforcement of Retailers” on this topic). Companies that utilize subscriptions, especially those that operate with negative renewal or negative option plans, should ensure that they are providing clear disclosures to consumers wishing to alter or cancel their services.