Online platform Age of Learning, Inc., will pay $10 million and change its marketing and billing practices to settle Federal Trade Commission charges that it improperly allowed tens of thousands of memberships to be renewed and charged without customers’ consent, the agency said.
The California-based company, which operates ABCmouse Early Learning Academy, provides online curriculum for children ages 2-13. It was accused of misrepresenting cancellations and failed to disclose key membership terms to access online educational content for children.
The company, in an emailed response to EdWeek Market Brief, said company practices cited in the FTC’s complaint were changed years ago.
It also said the vast majority of its subscribers understood its policies, and that the underlying facts of the case did not support the agency’s description of events.
The agency’s complaint alleges violations of the FTC Act and Restore Online Shoppers’ Confidence Act. It says Age of Learning between 2015 and at least 2018 advertised 12-month memberships for $59.95, and enrolled consumers in yearly plans that renewed indefinitely at the same price after the memberships expired.
The company failed to notify customers that memberships would automatically renew, that the company would charge members every year unless they cancel, and what consumers must do to cancel, according to the FTC complaint, filed in the U.S. District Court for the Central District of California.
The agency alleges that consumers tried without success to cancel by calling, emailing or contacting Age of Learning through a customer support form.
The company ignored the cancellation procedures it established, requiring consumers to “find and navigate a lengthy and confusing cancellation path that repeatedly discouraged consumers from canceling,” the complaint says.
‘Negative Option’ in Question
Because of this, consumers in many instances were billed again without consent, according to the FTC.
“Even consumers who completed the defendant’s cancellation path later discovered ongoing charges for additional content they believed they had canceled along with their base memberships,” the FTC alleged. The company, it said, “has received at least tens of thousands of consumer complaints about these practices.”
Age of Learning officials told told EdWeek Market Brief that the incidents the FTC was concerned about ended over two and a half years ago. The company also said only a small minority of ABCmouse subscribers were unclear about the subscription renewal procedures in question.
“Less than 2 percent of ABCmouse subscribers may not have fully understood that their subscriptions would renew, or how to easily cancel their memberships,” the company said.
Age of Learning regrets any confusion that any subscriber may have experienced, though the vast majority of families served by the company “have been highly satisfied,” according to the company.
Company spokesperson Kathryn Green said the company agreed to settle the matter to avoid a prolonged legal dispute, even though it disputes aspects of the FTC’s statements.
“We enhanced and streamlined our subscription, cancellation, and customer support processes years ago, and we are committed to continuing to provide an exceptional user experience to parents and caregivers,” the company said.
The FTC also complained about cited free trial practices by Age of Learning. According to the agency, when consumers enrolled in a 30-day free trial of a monthly ABCmouse membership, the company often offered them alternative payment options following the free month, including 12 months for $39.95 or six months for $29.95.
According to the terms of the proposed settlement order, in addition to paying the $10 million fine, Age of Learning has agreed to not use “negative option” features to expressly or implicitly misrepresent consumer costs.
Negative option policies refer to software features in which the consumer’s silence or failure to affirmatively act to reject a good or service or cancel an agreement is interpreted by the service provider as acceptance or continuing acceptance of the offer.
The order also requires Age of Learning to obtain express informed consent from consumers before billing them for any services, and outlines prescribed consent procedures.