Publishers Clearing House pays $18.5 million in ‘Dark Patterns’ suit
The news
Publishers Clearing House, the direct marketing company that uses sweepstakes to sell magazine subscriptions, agreed Monday to pay $18.5 million to settle a lawsuit filed by the Federal Trade Commission, which accused the company of using of so-called dark patterns to trick customers into paying for products or giving up their details.
The company coerced customers through false suggestions that making a purchase was the only way to enter the popular sweepstakes or that doing so would increase their chances of winning, the complaint said. The company has also been accused of charging customers hidden fees during purchases, sending deceptive marketing emails and misleading customers about how their data was used.
Many of the customers who fell victim to these tactics are older and on lower incomes, according to the suit, which was filed in the U.S. District Court for the Eastern District of New York. In addition to paying $18.5 million, which the FTC said it would use to refund customers, the company agreed to tweak the interface to avoid more confusion.
Publishers Clearing House did not immediately respond to a request for comment.
Why it matters: “Dark patterns” are increasingly used.
As more commerce takes place online, shady patterns, which use deceptive designs to mislead consumers, are becoming more common, the FTC said in released a report in September.
A common dark pattern is when a company makes it difficult to cancel a subscription or purchase by diverting customers from that option. For example, when companies offer free trials but hide the cancel button deep in the account settings.
In other cases, a company may present its privacy settings in such a way as to persuade customers to disclose most of their personal information without their informed consent. The FTC accused Publishers Clearing House of doing this prior to January 2019 by telling customers it was not sharing customer data with third parties when it did.
Publishers Clearing House is also accused of sending deceptive marketing emails – another common shady pattern – with subject lines such as “High Priority Doc. W-34 Issued” leading customers to believe they need to deal with outstanding tax forms, when the content of the email was unrelated marketing content.
Background: Amazon has been accused of similar practices.
The FTC sued Amazon on Wednesday over similar shady patterns that the regulator said illegally forced consumers to sign up for the tech giant’s Prime service and prevented them from easily canceling the subscription. Amazon denied that its website interface violated the law.
That lawsuit is the first the FTC has brought against Amazon led by Lina Khan, who has long been critical of Amazon’s market power.
“Companies that continue to employ deceptive design techniques are being warned,” Samuel Levine, chief of the FTC’s consumer protection division, said in a statement.