Despite Brigit’s promises that advances would be available with “free instant transfers,” the complaint notes that the company began charging consumers a 99-cent fee for an instant transfer. Consumers who did not pay the fee had to wait up to three business days for their advances. In addition, the complaint charges that while Brigit claimed to offer “non-recourse” advances with no fees or interest, the company prevented consumers who had an open advance from canceling their subscription and continued to withdraw $9.99 monthly from their bank account until the advance was paid off.

The proposed settlement order, which must be approved by a federal judge before it can go into effect, would require Brigit to pay $18 million to the FTC to be used to provide refunds to consumers. In addition, the order would prohibit Brigit from misleading consumers about how much money is available through their advances, how fast the money would be available, any fees associated with delivery, and consumers’ ability to cancel their service. The order would also require the company to make clear disclosures about its subscription products and provide a simple mechanism for consumers to cancel.

“Brigit trapped those consumers least able to afford it into monthly membership plans they struggled to escape from,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that offer cash advances and other alternative financial products have to play by the same rules as other businesses or face potential action by the FTC.”

The Commission voted to authorize the staff to file the complaint and the stipulated final order was 3-0. The FTC filed the complaint and final order in the U.S. District Court for the Southern District of New York.

Overall, the FTC’s action against Brigit serves as a reminder to companies offering alternative financial products to be transparent and truthful in their marketing promises and to provide clear mechanisms for consumers to cancel their services.

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The Federal Trade Commission has sent letters to 50 online marketplaces nationwide notifying them about their obligation to comply with the new Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act – or the INFORM Consumers Act – as soon as it takes effect on June 27.

“The INFORM Consumers Act requires online marketplaces to protect consumers from counterfeit, unsafe, and stolen goods by verifying their high-volume third-party sellers’ identities, and making it easier for consumers to report suspicious marketplace activity,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The Commission will enforce the Act to the fullest extent possible and will collaborate with our state partners to hold online marketplaces accountable.”

The letters announced today to enclose a copy of the act, highlight the responsibilities the act places on online marketplaces, and urge that businesses carefully review the statute and take all steps necessary to fully comply by June 27. In the letters, FTC staff also urge online marketplaces to communicate with their third-party sellers about the information the act requires to be collected, verified, and disclosed.

Finally, the letters emphasize that a violation of the act may be treated as a violation of an FTC rule, and thus non-compliant online marketplaces may face enforcement that could result in civil penalties of $50,120 per violation. The letters are informational and the FTC is not publicly releasing the names of the recipients.

Understanding Compliance Obligations

As part of the FTC’s effort to fully inform the public about the provisions of the INFORM Consumers Act and to put businesses on notice of their obligations as of June 27, it has developed business education materials that are available on the agency’s website. “Informing Businesses About the INFORM Consumers Act,” summarizes how online marketplaces can comply with the act when it goes into effect at the end of the month with links to the act itself.

The lead staff attorneys on this matter are Carl Settlemyer and Tiffany Woo in the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission works to promote competition and protect and educate consumers. Learn more about consumer topics at consumer.ftc.gov, or report fraud, scams, and bad business practices at ReportFraud.ftc.gov. Follow the FTC on social media, read consumer alerts and the business blog, and sign up to get the latest FTC news and alerts.

The post FTC Puts Online Marketplaces on Notice About Their Responsibilities Under the New INFORM Consumers Act appeared first on NRI News.