FTC Sues Bill Payment Company For Use of “Dark Patterns”

The Federal Trade Commission (“FTC”) has filed a complaint against Doxo, Inc. (“Doxo”), a bill payment company, and its co-founders, alleging that the company utilized misleading ads to imitate consumers’ billers, as well as deceptive practices to mislead consumers into paying millions of dollars in junk fees. As demonstrated by this latest enforcement action, the FTC is continuing to focus on manipulative marketing techniques known as “dark patterns.” This should serve as a reminder to marketers that the use of such practices may result in enforcement actions.

Doxo is a third-party bill payment platform. According to the complaint filed by the FTC in the Western District of Washington, Doxo advertises that consumers can “pay any bill,” including car loans, utilities, and medical bills, using its expansive network of billers. According to the FTC, however, Doxo does not actually have a relationship with the majority of billers in its “network.” Rather, the FTC claims Doxo tricks consumers into using its services by impersonating the billers so that consumers believe they are paying through the billers’ official payment channels. After manipulating consumers into paying their bills through Doxo, the FTC further alleges that Doxo adds junk fees to the consumers’ bills, that in many cases consumers could avoid if they paid the billers directly. Further, the FTC alleges that Doxo deceptively enrolled many consumers in automatically renewing subscriptions.

The FTC asserts that due to Doxo’s use of “dark patterns,” the company has caused consumers to pay millions of dollars in junk fees. Moreover, the FTC states that as a result of Doxo’s deceptive practices, consumers have missed tax, child support, and utility payments, have had certain bills sent to collections agencies, and have had their gas, water, and electricity cut off.

In its complaint, the FTC highlights that over a period of years, Doxo received complaints from tens of thousands of consumers and hundreds of billers regarding the harm caused by Doxo’s business model, and even with this knowledge, the company’s co-founders still failed to take appropriate action to correct its misleading marketing techniques and general business model.

The FTC is seeking a permanent injunction and unspecified monetary relief.   

TAKEAWAY: As evidenced by this lawsuit, the FTC is continuing to take aim at perceived “dark patterns.” This complaint should serve as a reminder to marketers and subscriber-based companies to ensure compliance with laws and guidance regarding marketing techniques that may be deemed to fall within the ambit of “dark patterns.”

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