Excerpt
MyLife.com was held liable for luring consumers in hard-to-cancel subscription programs and deceptive billing practices.
Our analysis
MyLife.com and Jeffrey Tinsley were held liable for employing deceptive tactics in their operations.
-They utilized "teaser background reports" to lure online consumers into difficult-to-cancel subscription programs.
-Misleadingly, they claimed that the company's background reports on individuals contained arrest, criminal, and sexual offender records, even when such information was absent, with the aim of persuading consumers to subscribe to auto-renewing premium services. In many cases, consumers searching for an individual's background report on the MyLife.com website were presented with search results implying, often inaccurately, that the subject may have criminal or sexual offense records that could only be accessed through a MyLife subscription. Consequently, consumers were misled into believing they or others had criminal records, including minor traffic violations.
- The deceptive designs employed by MyLife included hidden costs and creating a subscription system that was intentionally hard to cancel. MyLife, operating as a consumer reporting agency, violated the Fair Credit Reporting Act (FCRA) by failing to establish reasonable procedures for report usage verification, accuracy, and lawful purposes. MyLife also was held liable for violating the Restore Online Shoppers' Confidence Act (ROSCA), and FTC Act (15 U.S.C. § 45) through deceptive billing practices and the Telemarketing Sales Rule by misrepresenting refund and cancellation policies.
Outcome
In the settlement, Tinsley and MyLife have agreed to separate judgments totaling $33.9 million, with Tinsley responsible for paying $5 million and MyLife paying a partially suspended judgment of $16 million due to financial constraints. These funds will be allocated for consumer refunds. MyLife will be obligated to pay the full remaining amount of the judgment if its financial misrepresentation is confirmed. Additionally, Tinsley and MyLife are permanently prohibited from offering products with negative option features and engaging in deceptive practices as outlined in the complaint, which includes misleading implications regarding individuals' criminal records in cases of traffic violations. Furthermore, MyLife is mandated to implement a monitoring program to ensure compliance with the Fair Credit Reporting Act (FCRA).
Parties
Federal Trade Commission, MyLife.com, Inc., and Jeffrey Tinsley
Case number
2:20-cv-06692-JFW-PD
Decision
Related deceptive patterns
Hidden costs involve obscuring or omitting additional fees, charges, or costs until the user is well into the purchasing or sign-up process. By that point, the user has already invested time and effort into the transaction and is more likely to proceed despite the unexpected costs.
Hard to cancel (aka "Roach Motel") is a deceptive pattern where it is easy to sign up for a service or subscription, but very difficult to cancel it. This typically involves hiding the cancellation option, requiring users to call customer services to cancel, and making the cancellation process overly complex and time-consuming. This can cause users to give up trying to cancel, and continue paying for the service for a longer period.
Related laws
Mandates consumer reporting agencies to implement fair and accurate procedures for handling consumer credit information, ensuring confidentiality and relevance while upholding consumer rights.