Skip to content

Menu

LexBlog, Inc. logo
NetworkSub-MenuBrowse by SubjectBrowse by PublisherJoin the NetworkGet StartedSubscribeSupportContact
Search
Close

CFPB Sues Payment Platform as the Crack Down on Dark Patterns Continues

By Moorari Shah, A.J. Dhaliwal & Alyssa Paddock on October 20, 2022
Email this postTweet this postLike this postShare this post on LinkedIn
Consumer-Finance-and-Fintech-Blog-Image-Fintech1-660x283

On October 18, 2022, the CFPB sued a software company that manages online payment platforms claiming that it utilized unlawful enrollment practices to cause unknowing consumers to automatically enroll in annual subscriptions. According to the CFPB, the software company generated over $300 million in fees from approximately three million consumers through engagement in deceptive acts and “dark pattern” techniques in violation of the CFPA and EFTA by:

  • inserting a webpage into the registration and payment process that asked customers to click on an “accept” button without adequate information on what they were accepting;
  • conducting marketing tests and making calculated design choices in order to manipulate consumers into enrolling in the annual subscription without their knowledge;
  • maintaining a “negative option” renewal policy on its’ annual subscription, so that the subscription automatically renewed each year unless consumers took affirmative action; and
  • converting the consumers free trial into an annual subscription through the negative option renewal policy, causing such consumers to pay the annual fee without their knowledge or intent.

The CFPB’s complaint requests that the court grant, among other things, the following forms of relief: (i) permanently enjoin the software company from committing future CFPA and EFTA violations; (ii) award relief as the court finds necessary to address the consumers’ injury, including but not limited to: refunds, restitution, compensation, and payment of damages, (iii) impose a civil money penalty against the software company; and (iv) order the software company to pay the CFPB’s costs incurred with the prosecution.

The CFPB Director, Rohit Chopra, issued a statement at the time of suit, highlighting the focus points of the CFPB that are pertinent to the case, including (i) closely watching financial services firms utilizing digital dark patterns; (ii) reducing unwanted fees for unwanted services that provide no value to consumers; and (iii) ensuring payment platforms are working safely.

Putting it into Practice: As we’ve previously reported, this suit illustrates an issue that both the FTC and the CFPB have made an effort to monitor and eliminate: the utilization of digital dark patterns, which generally refer to manipulative website designs that target consumer behavior (see our previous blog posts here and here). In this case, Director Chopra also pointed to the specific importance of safeguarding payment platforms. Consumer-facing software companies, particularly those operating or utilizing payment platforms, should review the complaint and press release and ensure their webpages do not use such tactics.

Photo of Moorari Shah Moorari Shah

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm’s Los Angeles and San Francisco offices.

Read more about Moorari ShahEmail
Photo of A.J. Dhaliwal A.J. Dhaliwal

A.J. is a partner in the Finance and Bankruptcy Practice Group in the firm’s Washington, D.C. office.

Read more about A.J. DhaliwalEmail
Photo of Alyssa Paddock Alyssa Paddock

Alyssa Paddock is an associate in the Finance and Bankruptcy Practice Group in the firm’s New York office.

Read more about Alyssa PaddockEmail
  • Posted in:
    Banking, Finance and Securities
  • Blog:
    Consumer Finance and Fintech Blog
  • Organization:
    Sheppard, Mullin, Richter & Hampton LLP
  • Article: View Original Source

Call us at 1-800-913-0988 or email sales@lexblog.com.

Facebook LinkedIn Twitter RSS
The Library at LexBlog
  • About LexBlog
  • The Field We Built
  • Library at LexBlog
  • Our Beliefs
  • Our Team
  • Contact LexBlog
  • Disclaimer
  • Editorial Policy
  • Terms of Service
  • Get Started
  • Publishing Solutions
  • Compass
  • Submit a Request
  • Support Center
  • System Status
Copyright © 2026, LexBlog, Inc. All Rights Reserved.
Law blog design & platform by LexBlog LexBlog Logo