CFPB: Active Network Duped Users Into $300M in Junk Fees

The Consumer Financial Protection Bureau (CFPB) has sued Active Network, saying the online event registration company duped people into signing up for its discount subscription club and generated $300 million in the process.

According to a Tuesday (Oct. 18) news release, the CFPB lawsuit alleges that Active “automatically and unlawfully enrolled families into its discount club by using digital duplicity.”

The bureau said the company got members who thought they were registering for a race or community event to sign up for a “costly membership club.” Its lawsuit aims to require Active to change this enrollment practice, reimburse consumers and pay a penalty.

Based in Plano, Texas, Active Network operates a payments system used by organizations that include the YMCA. The company called the CFPB suit “frivolous and without merit” in a statement to PYMNTS.

“The Active Advantage product, the target of today’s action, has been reviewed by multiple federal and state regulators, including the Federal Trade Commission,” a company spokesperson said. "Active Advantage has nothing to do with the provision of consumer financial services, making the CFPB’s action outside the scope of the agency’s authority. This matter is immaterial.”

According to the CFPB, Active has – over the last decade – driven up sign-ups in the Active Advantage subscription club by using 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.

See also: CFPB: Colleges Need to Protect Students From ‘Junk Fees’

The suit comes just days after the CFPB issued a report saying that America’s colleges have more work to do in terms of guarding against “junk fees” issued to students.

The report examined the fees connected to banking products marketed to students by financial institutions in collaboration with colleges. The bureau said its findings raise questions about whether these partnerships adhere to U.S. Department of Education regulations.

In addition, the report also focuses on “a lack of transparency in the arrangements schools have made with financial institutions," the CFPB said. It has led the Department of Education to issue guidance to colleges on requirements for school-sponsored banking deals and commit to more oversight on the matter.