Publishers Clearing House, the direct marketing company that uses sweepstakes to sell magazine subscriptions, agreed on Monday to pay $18.5 million to settle a lawsuit brought by the Federal Trade Commission, which accused the company of using what’s known as dark patterns to trick customers into paying for products or giving up their data.
The company coerced customers through false suggestions that making a purchase was the only way to enter its popular sweepstakes or that doing so would increase their chances of winning, the complaint says. The company is also accused of charging customers hidden fees during purchases, sending deceptive marketing emails and misleading customers about how their data was being used.
Many of the customers who fell victim to these tactics are older and have lower incomes, according to the suit, which was filed in U.S. District Court for the Eastern District of New York. On top of paying $18.5 million, which the F.T.C. said it would use to refund customers, the company agreed to adjust its interface to prevent more confusion.
Publishers Clearing House did not immediately respond to a request for comment.
Why It Matters: ‘Dark patterns’ are being used more frequently.
As more commerce moves online, dark patterns, which use deceptive design to dupe consumers, are becoming increasingly common, the F.T.C. said in a report released in September.
A common dark pattern is when a company makes it difficult to cancel a subscription or purchase by steering customers away from that option. For example, when companies offer free trials but hide the cancellation button deep in the account settings.
In other cases, a company could present its privacy settings in a way that persuades customers to release the most amount of personal information without their informed consent. The F.T.C. accused Publishers Clearing House of doing this before January 2019 by telling customers that it did not share costumer data with third parties when it had.
Publishers Clearing House is also accused of sending deceptive marketing emails — another common dark pattern — with subject lines like “High Priority Doc. W-34 Issued” that led customers to believe they needed to address outstanding tax forms while the content of the email was unrelated marketing content.
Background: Amazon has been accused of similar practices.
The F.T.C. sued Amazon on Wednesday over similar dark patterns that the regulator said illegally coerced consumers into signing up for the tech giant’s Prime service and prevented them from easily canceling the subscription. Amazon denied that its website interface broke the law.
That lawsuit is the first one the F.T.C. has filed against Amazon under the leadership of Lina Khan, who has long been critical of Amazon’s market power.
“Firms that continue to deploy deceptive design techniques are on notice,” Samuel Levine, who leads the F.T.C.’s consumer protection branch, said in a statement.