An online event registration company – ACTIVE Network, of Plano, Texas – is being sued by the federal consumer financial protection agency over its allegedly unlawful enrolling of consumers into its discount club as those consumers sought to register for fundraising road races and other events, the agency announced Tuesday.
The Consumer Financial Protection Bureau (CFPB) said it is suing to require ACTIVE Network to change the unlawful enrollment practice, reimburse consumers, and pay a penalty.
The CFPB said ACTIVE Network 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. The bureau said that during registration, many consumers who just thought they were registering for a community race or event ended up being enrolled into Active Advantage, a paid membership club operated by ACTIVE Network that offers discounts for products and activities rarely related to those events and for which consumers are charged an annual fee of $89.95. It added that ACTIVE failed to notify Active Advantage members of fee increases before charging members, in violation of the Electronic Fund Transfer Act (EFTA) and its implementing regulations.
ACTIVE has, over the past decade, driven up enrollments in Active Advantage through the use of dark patterns – 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, according to the CFPB. The bureau also said that 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.
The CFPB alleges that ACTIVE violated the Consumer Financial Protection Act (CFPA) 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.
It also 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. Since July 21, 2011, members who signed up through inserted offers have redeemed only a fraction of alleged membership benefits, it said.
The bureau said ACTIVE Network was purchased by Global Payments Inc. (NYSE: GPN) in 2017 for a reported $1.2 billion.
The CFPB filed its suit Tuesday in the U.S. District Court for the Eastern District of Texas.