What lurks within the terms of service of your favorite financial apps? For users of FloatMe, a fintech company recently penalized by the FTC, hidden clauses meant unexpected charges and complicated cancellation processes.
FloatMe was accused of deploying a mobile application that used a negative option feature to ensnare consumers into recurring charges without clear consent. This method, often critiqued for its potential to mislead, hinges on the assumption that a consumer’s inaction (such as not cancelling a subscription) can be interpreted as agreement to continue paying.
The lack of transparency in disclosing terms of transactions before obtaining billing information was a cornerstone of the FTC’s complaint, suggesting that FloatMe not only enrolled consumers under deceptive pretenses but also made it difficult for them to extricate themselves from unwanted subscriptions.
The economic implications for consumers were immediate. Users of the FloatMe app, particularly those in financially precarious situations, found themselves subjected to fees and charges they had not explicitly agreed to. This could exacerbate financial instability for individuals already struggling, potentially leading to overdraft fees, decreased credit scores, and an overall tighter financial strain as they navigated the hurdles to cancel hidden subscriptions.
The deceptive practices of FloatMe likely extended their impact into the social and health spheres of consumers’ lives. Financial stress is closely linked to adverse health outcomes, including increased risk of mental health disorders such as anxiety and depression. Socially, individuals burdened by unexpected debts may withdraw from community engagement or face increased family stress, further amplifying the personal and communal toll of such corporate practices.
Notably, the FTC’s complaint also illuminated discriminatory practices against consumers receiving public assistance. By imposing different standards or denying services based on the source of a consumer’s income, FloatMe not only engaged in legally dubious behavior but also perpetuated systemic biases that hinder the financial mobility of vulnerable populations. This kind of discrimination can lead to a reinforcing cycle of poverty and marginalization, where those needing the most support are denied access to resources that could facilitate greater economic stability.
The court’s stipulated order on this case imposed a significant monetary judgment against FloatMe and its officers, totaling three million dollars to be sent to the people harmed by this act of corporate greed.