Online Children’s Education Company Age Of Learning To Pay $10 Mln To Settle Charges
Online education company Age of Learning Inc. has agreed to pay $10 million to settle Federal Trade Commission charges of illegal marketing and billing practices.
The FTC said that southern California-based Age of Learning, which operates ABC Mouse, did not disclose important information regarding its subscription plans to consumers. This led to consumers’ membership being automatically renewed and charged without their consent.
Age of Learning unfairly billed ABCmouse users without their authorization and made it difficult for consumers to cancel their memberships, preventing consumers from avoiding additional charges, the FTC alleged.
Age of Learning operates a membership-based online learning tool called ABCmouse Early Learning Academy for children between two and eight years old. Users can access ABCmouse content on reading, math and other subjects through the company’s website or mobile app.
According to the FTC’s complaint, Age of Learning advertised membership programs without adequately disclosing key membership terms while marketing ABCmouse to consumers over a three-year period from 2015 until at least 2018.
Although ABCmouse advertised “Special Offer” twelve-month memberships for $59.95, it did not disclose to consumers that the plans would automatically renew for an indefinite period, leading them to incur additional charges.
In addition, consumers who enrolled in a 30-day free trial membership were offered the ability to extend their membership beyond the trial period, at a cost of $39.95 for twelve months or $29.95 for six months.
However, the company again failed to adequately disclose that consumers would be charged automatically and indefinitely after the initial period ended, the complaint alleges.
The FTC also alleges that ABCmouse failed to provide consumers with a simple way to stop the automatic renewals, despite promising “easy cancellation” at the time of enrollment.
In addition to the $10 million judgment against ABCmouse, the proposed settlement order bars the company from making any misrepresentations related to negative options.
ABCmouse is also required to disclose important information to consumers when it offers negative option plans, such as how consumers can cancel the plans, the amount they will be charged if they do not cancel, and the deadlines by which they must cancel to avoid unwanted charges.
ABCmouse is also required to obtain consumers’ informed consent before enrolling them in any automatic billing programs and also provide simple cancellation mechanisms.
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