`
`
`
`
`ALDEN F. ABBOTT
`General Counsel
`MATTHEW H. WERNZ
`mwernz@ftc.gov
`JOANNIE T. WEI
`jwei@ftc.gov
`Federal Trade Commission
`230 South Dearborn, Suite 3030
`Chicago, Illinois 60604
`312.960.5596 (Wernz)
`312.960.5607 (Wei)
`ATTORNEYS FOR PLAINTIFF
`
`
`
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`
`
`
`
`
`v.
`
`Plaintiff,
`
`FEDERAL TRADE COMMISSION,
`
`
`
`
`
`AGE OF LEARNING, INC., a
`corporation, also d/b/a ABCmouse and
`ABCmouse.com,
`
`
`
`
`Case No. 2:20-cv-7996
`
`COMPLAINT FOR
`PERMANENT INJUNCTION
`AND OTHER EQUITABLE
`RELIEF
`
`
`
`
`Defendant.
`Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges:
`The FTC brings this action under Sections 13(b) and 19 of the Federal
`1.
`Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and the Restore
`Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. § 8404, to obtain
`permanent injunctive relief, rescission or reformation of contracts, restitution, the
`refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief
`
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 2 of 25 Page ID #:2
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`for Defendant’s acts or practices in violation of Section 5(a) of the FTC Act, 15
`U.S.C. § 45(a), and in violation of Section 4 of ROSCA, 15 U.S.C. § 8403.
`JURISDICTION AND VENUE
`This Court has subject matter jurisdiction pursuant to 28 U.S.C.
`2.
`§§ 1331, 1337(a), and 1345.
`Venue is proper in this District under 28 U.S.C. § 1391(b)(1), (b)(2),
`3.
`(c)(2), (c)(3), and (d), and 15 U.S.C. § 53(b).
`PLAINTIFF
`The FTC is an independent agency of the United States Government
`4.
`created by statute. 15 U.S.C. §§ 41–58. The FTC enforces Section 5(a) of the
`FTC Act, 15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in
`or affecting commerce. The FTC also enforces ROSCA, 15 U.S.C. §§ 8401-8405.
`ROSCA prohibits the sale of goods or services on the Internet through negative
`option marketing without meeting certain requirements for disclosure, consent, and
`cancellation to protect consumers. A negative option is an offer in which the seller
`treats a consumer’s silence—i.e., their failure to reject an offer or cancel an
`agreement—as consent to be charged for good and services. 16 C.F.R. § 310.2(w).
`The FTC is authorized to initiate federal district court proceedings, by
`5.
`its own attorneys, to enjoin violations of the FTC Act and ROSCA and to secure
`such equitable relief as may be appropriate in each case, including rescission or
`reformation of contracts, restitution, the refund of monies paid, and the
`disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b), 57b, 8404.
`DEFENDANT
`Defendant Age of Learning, Inc. (“Age of Learning”), also doing
`6.
`business as ABCmouse and ABCmouse.com, is a Delaware corporation with its
`principal place of business at 101 North Brand Boulevard, 8th Floor, Glendale,
`California 91203. Age of Learning transacts or has transacted business in this
`
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 3 of 25 Page ID #:3
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`District and throughout the United States. At all times material to this Complaint,
`acting alone or in concert with others, Age of Learning has advertised, marketed,
`distributed, or sold online educational programs to consumers throughout the
`United States.
`
`COMMERCE
`At all times material to this Complaint, Defendant has maintained a
`7.
`substantial course of trade in or affecting commerce, as “commerce” is defined in
`Section 4 of the FTC Act, 15 U.S.C. § 44.
`DEFENDANT’S BUSINESS PRACTICES
`From 2015 until at least 2018, Defendant failed to adequately disclose
`8.
`key terms of memberships to access online educational content for children.
`Touting twelve-month memberships for $59.95, Defendant enrolled consumers in
`yearly plans that renewed indefinitely at the same price after the twelve months
`expired. Defendant failed to disclose material information about these and other
`term memberships, including that they automatically renew, that Defendant would
`charge members each year unless they cancel, and what consumers must do to
`cancel. Even though consumers who signed up were prominently promised “Easy
`Cancellation,” Defendant for years made cancellation difficult. Many consumers
`tried without success to cancel by calling, emailing, or contacting Defendant
`through a customer support form. Rather than accepting these cancellation
`methods, Defendant instead required consumers to find and navigate a lengthy and
`confusing cancellation path that repeatedly discouraged consumers from canceling
`and, in many instances, resulted in consumers being billed again without their
`consent. Over the course of at least three years, hundreds of thousands of
`consumers visited Defendant’s cancellation path but remain enrolled. Even
`consumers who completed Defendant’s cancellation path later discovered ongoing
`charges for additional content they believed they had canceled along with their
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 4 of 25 Page ID #:4
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`base memberships. Defendant has received at least tens of thousands of consumer
`complaints about these practices.
`Defendant’s Misleading Enrollment Practices
`Defendant operates a membership-based online learning tool called
`9.
`ABCmouse Early Learning Academy for children ages 2 to 8 years old.
`ABCmouse includes digital content on reading, language arts, math, and other
`subjects. Consumers can access ABCmouse at Defendant’s website,
`abcmouse.com, and through Defendant’s mobile application (“app”). Defendant
`provides consumers access to ABCmouse through memberships, which typically
`cost from $9.95 for monthly memberships to $59.95 for twelve-month
`memberships.
`10. On ABCmouse.com and in its app, Defendant has advertised
`membership to ABCmouse Early Learning Academy. Above an animated image
`of a teacher gesturing to her classroom, Defendant displayed a bright green gift tag
`with a prominent link offering consumers a “Special Offer 38% OFF Annual
`Membership! Learn More!” The following is a representative image of such an
`offer from Defendant’s website:
`
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 5 of 25 Page ID #:5
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`11. Consumers who clicked on the “Special Offer” link were directed to
`an enrollment page with the same green gift tag. There, next to a prechecked box,
`in large blue and red bold font, Defendant offered consumers a membership
`costing either “$59.95 for 12 Months” or “4 equal monthly installments of
`$19.75.” Defendant promised “Easy Cancellation” in bold, red text, stating: “If
`your family does not absolutely love ABCmouse, you can cancel at any time!”
`Defendant promised the same “Easy Cancellation” to consumers who enroll in
`monthly memberships. To enroll, consumers were required to submit their email
`address, password, and payment information, and they also were required to check
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 6 of 25 Page ID #:6
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`a box agreeing to Defendant’s terms and conditions. A representative image of the
`enrollment page is below:
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`12. Consumers who used this page to sign up for a twelve-month
`ABCmouse membership were instead enrolled in a negative option plan under
`which Defendant charged them $59.95 immediately and each year thereafter until
`they affirmatively have canceled. For at least three years, Defendant did not
`disclose these facts anywhere on the enrollment page. Nor did Defendant disclose
`how consumers were to accomplish the advertised “easy cancellation.”
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 7 of 25 Page ID #:7
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`13. Similarly, when consumers enrolled in a 30-day free trial of an
`ABCmouse monthly membership, Defendant often offered them alternative
`payment options following their free month, including twelve months for $39.95 or
`six months for $29.95. Defendant also often offered all consumers who signed up
`for twelve-month memberships access for twelve months at the cost of $39.95 to
`Defendant’s “Assessment Center,” a separate service that includes quizzes and
`lessons to measure children’s skills. Defendant did not disclose that after charging
`consumers who selected these options immediately for the stated membership
`term, Defendant would charge consumers again at the end of that period for the full
`six or twelve months, and on a recurring basis thereafter until they canceled.
`14. Rather, during these three years, Defendant described the ongoing
`nature of these term memberships only in separately hyperlinked terms and
`conditions. Even if consumers were to click on the hyperlinked terms and
`conditions, however, they would be unlikely to see that Defendant’s term
`memberships automatically renew each year. Defendant buried this information in
`dense text, in small font and in single-spaced type.
`15. Not until in or around early 2018, after receiving a Civil Investigative
`Demand from the Federal Trade Commission, did Defendant modify its term
`membership enrollment pages to include information about the membership’s
`automatic renewal. Even then, for its twelve-month membership, Defendant
`buried that information in the smallest font on the page under a bright red heading
`labeled “Easy Cancellation.” This disclosure was not close to or in similar size,
`brightness, or prominence to Defendant’s representation that consumers were
`paying “$59.95 for 12 Months” of membership. Thus, despite this modification,
`consumers were unlikely to see any disclosure of the automatic renewal of their
`twelve-month memberships.
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 8 of 25 Page ID #:8
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`16. Tens of thousands of consumers have complained to Defendant that
`they did not know that ABCmouse memberships would automatically renew.
`These complaints have continued after the 2018 change discussed in paragraph 13
`above. Many of these consumers also complained that they had not authorized
`Defendant to charge their accounts on an ongoing basis. For example, one
`consumer who was surprised to be charged automatically for a second twelve-
`month period complained, “No one asked me if I wanted to subscribe again. My
`personal account was just accessed without my permission.”
`17. Defendant was well aware of these types of consumer complaints.
`Indeed, in January 2015, after completing an internal review, Defendant concluded
`that common customer support issues include that the “Subscription page is
`misleading,” and “Customers are confused about their billing plan on registration,
`customers do not like that they [are] not notified of their auto-renewal.”
`18. Despite that conclusion, no changes were made, and consumers
`continued to complain. More than a year later, a customer service representative
`described a consumer complaint as “the standard ‘I only subscribed for 1 year and
`now I’m being billed again’ complaint.” By 2018, three years after the internal
`review, Defendant’s Vice President of Customer Support described the same
`problem, that consumers were complaining that automatic renewals of twelve-
`month memberships were:
`catching them off guard as they did not recognize it was an auto-
`renewal . . . . [W]e encounter many customers that are confused as to
`what it is that they are signing up for in terms of length of subscription
`and even more so how much and when they will be charged.
`19. Despite more than three years of similar complaints, Defendant
`continued to enroll consumers in term memberships without clearly and
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 9 of 25 Page ID #:9
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`conspicuously disclosing to them the ongoing charges associated with those
`memberships or how to cancel them.
`Defendant Made It Difficult for Consumers to Cancel
`20. ABCmouse memberships—including monthly and term
`memberships—automatically renew until consumers cancel. For years, Defendant
`restricted the ways consumers could cancel their memberships, permitting
`cancellation only through an online mechanism within Defendant’s website and
`app that was difficult for consumers to find and complete. Consumers who
`requested cancellation via this mechanism often have believed they canceled, but
`Defendant continued to charge them anyway. Defendant routinely refused to
`honor consumers’ cancellation requests that were not made through the online
`mechanism. As a result, Defendant continued to charge tens of thousands of
`consumers who requested cancellation or believed that their accounts had already
`been canceled.
`
`Defendant Refused to Accept Cancellation Requests
`by Telephone, Email or Web Form
`21. On its website and in its app, Defendant did not post a customer
`service telephone number or email address that consumers could use to contact
`Defendant to cancel their memberships.
`22. Some consumers were able to find a telephone number for Defendant
`by searching online, however. Consumers who called this number often were
`unable to reach a customer service representative because of long wait times that
`resulted in many consumers simply hanging up. For example, in each month from
`October 2016 through April 2018, consumers who called the customer service line
`had to wait an average of at least 10 minutes to talk with a customer service
`representative. In December 2017, according to Defendant’s internal data, the
`average wait time exceeded 30 minutes. By June 2017, the call-abandonment rate
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 10 of 25 Page ID #:10
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`resulting from these wait times had risen to more than 30 percent, which Defendant
`acknowledged was “out of control.” By the end of 2017, 60 percent of all calls to
`Defendant were abandoned without consumers reaching an ABCmouse
`representative. In many instances, consumers who reached a customer service
`representative were told that they could not cancel their memberships by phone,
`and were instead directed to Defendant’s website or app to cancel.
`23. Some consumers also were able to find an email address for
`Defendant by searching online. Consumers who emailed Defendant to request
`cancellation often were told that they could not cancel their memberships by email,
`and were instead directed to Defendant’s website or app to cancel.
`24. Numerous consumers submitted requests to cancel their memberships
`through a web form found on Defendant’s website in the “Parent Home” page, by
`clicking on “Customer Support” and then on a link labeled “Contact Us.” The
`“Contact Us” form included a box in which consumers could type a message, and
`many consumers used this box to notify Defendant they wanted to cancel their
`memberships. However, instead of honoring these cancellation requests,
`Defendant typically responded that, “A member’s account can only be cancelled
`by that member on the site itself, not via email or any other means.” Defendant
`claimed that requiring consumers to cancel through the site’s cancellation
`mechanism “helps us to ensure that accounts are not cancelled unintentionally or
`maliciously.” Defendant refused cancellation requests from more than 100,000
`consumers in this way, instead redirecting them to Defendant’s website to cancel.
`Defendant Used a Hard-to-Find, Poorly Labeled
`Online Cancellation Mechanism
`25. Consumers often had difficulty locating Defendant’s online
`cancellation mechanism. To do so, consumers first had to go to the “My Account”
`section of Defendant’s website, where there were three boxes labeled “Account
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 11 of 25 Page ID #:11
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`Information,” “Membership,” and “Billing.” Consumers were required to click on
`the “Membership” box, which took them to a summary of their membership terms
`and included a link to “Customer Support” at the bottom of the page. Clicking on
`“Customer Support” would not take consumers to Defendant’s online cancellation
`mechanism, but would send them to a series of frequently asked questions and the
`“Contact Us” link described above. In the lower left corner of the Membership
`screen, Defendant included a link in small, light colored font, to its “Cancellation
`Policy.” Instead of the cancellation policy, however, this link took consumers to
`Defendant’s online cancellation mechanism.
`26. For years, consumers who wanted to cancel their memberships often
`were unable to find this cancellation mechanism on Defendant’s site. Defendant
`received complaints that consumers were unable to locate this online cancellation
`mechanism, but Defendant did not take any steps to make this mechanism more
`prominent or easier to locate. In September 2016, one of Defendant’s customer
`support representatives noted that when Defendant directed consumers to its site to
`cancel, the membership “never gets canceled by the customer and then we get
`several more emails back or angry calls.”
`Defendant’s Online Cancellation Mechanism Confused, Misdirected, and
`Frustrated Consumers Requesting Cancellation
`27. Even those consumers who were able to locate the cancellation path
`through the “Cancellation Policy” on Defendant’s website still had difficulty
`canceling because the path did not clearly inform consumers how to cancel and
`instead required consumers to navigate several pages of promotions and links that,
`when clicked, directed consumers away from the cancellation path without
`warning.
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 12 of 25 Page ID #:12
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`28. The first screen in the path often appeared as depicted below.
`
`29. Although this was the first screen of Defendant’s online cancellation
`path, it did not tell consumers that they had arrived at the correct place to cancel
`their memberships. Indeed, nowhere on this screen did the word cancellation, or
`any variation of it, appear. Instead, this screen promoted ABCmouse’s availability
`across several devices. The only way for consumers to continue along Defendant’s
`cancellation path was by clicking the button labeled “No Thanks, Continue” in the
`lower right-hand corner of the screen. Clicking this button would lead consumers
`to a series of other screens promoting additional ABCmouse features.
`30. Defendant often labeled buttons on these screens with vague and
`inconsistent descriptions, leaving many consumers confused about how to
`successfully complete Defendant’s cancellation path. For example, on one screen,
`depicted below, Defendant asked consumers to provide a reason for canceling,
`invited consumers to “contact our Customer Support team” through a link, and
`displayed buttons labeled “Back Home, “No Thanks, I’ll Wait,” and “Continue.”
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 13 of 25 Page ID #:13
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`31. Consumers who clicked the “Customer Support” link or the “Back
`Home” or “No Thanks, I’ll Wait” buttons would be removed from the cancellation
`path and would remain enrolled, often without their knowledge or consent.
`32. The only way to continue along the cancellation path was to provide a
`reason for canceling and then click “Continue.” But doing that took consumers to
`another screen, where Defendant attempted to persuade consumers not to cancel.
`For example, as shown below, a consumer who indicated “My Child Is Not
`Interested” as a reason for cancellation would be presented with a screen, labeled
`“Before You Go…,” and relaying a message that “many children love visiting the
`Aquarium, Hamster, Zoo, Farm, and the Shopping areas of our site,” along with
`links to those areas:
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 14 of 25 Page ID #:14
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`33. On this “Before You Go…” screen, consumers who clicked any of the
`five links to other areas of Defendant’s site or on the “Back Home” or “No Thanks,
`I’ll Wait” links would be removed from the cancellation path and would remain
`enrolled, often without their knowledge or consent.
`34. Consumers who pressed “Continue” on this screen were not canceled
`but were taken to still another screen, as shown below, prompting consumers to
`“Learn More” about an opportunity to “Upgrade” their memberships.
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 15 of 25 Page ID #:15
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`35. Consumers who clicked on the “Learn More” link would again be
`removed from the cancellation path. Defendant prompted these consumers to enter
`their passwords and click “Submit” on a popup that, in small print, stated that
`consumers would be billed. Defendant charged consumers who entered their
`passwords immediately for an additional twelve-month ABCmouse membership.
`Many consumers reported that they remained enrolled in this way without their
`knowledge or consent.
`36. Consumers who clicked on the “Back Home” or “No Thanks, I’ll
`Wait” link on this screen would again be removed from the cancellation path and
`would remain enrolled in their existing membership at the existing price, often
`without their knowledge or consent.
`In total, Defendant displayed along the cancellation path between six
`37.
`and nine screens that consumers were required to navigate to cancel their
`memberships. None of these screens informed consumers of the total number of
`screens along the cancellation path or how many screens remained before their
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 16 of 25 Page ID #:16
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`memberships would be canceled. Consumers could not skip ahead or cancel
`without visiting each screen. Each screen included multiple links and buttons that,
`if pressed, would take consumers out of the cancellation path and maintain their
`memberships.
`38. Defendant failed to provide a simple cancellation mechanism by
`which consumers could stop recurring charges. Defendant’s cancellation
`mechanism was not disclosed on its product order or confirmation pages, nor in the
`confirmation emails consumers receive for their online transactions. Additionally,
`it was much more difficult to cancel a membership and Defendant’s recurring
`charges than it is to sign up for the membership and to initiate the recurring
`charges.
`39. Moreover, unbeknownst to many consumers, canceling their
`memberships did not cancel all charges associated with their accounts. Many
`consumers who enrolled in Defendant’s “Assessment Center” found that they
`continued to be charged for the Assessment Center even after canceling their
`ABCmouse memberships. Many of these consumers found that, even once they
`realized they needed to separately cancel their Assessment Center membership,
`they could not do so because Defendant had deactivated their login credentials
`when they canceled their ABCmouse memberships. Thus, for at least seven
`months, consumers complained to Defendant that they did not understand that
`canceling their ABCmouse memberships would not also cancel the Assessment
`Center membership.
`Defendant’s Restrictive Cancellation Practices
`Resulted in Unauthorized Charges
`40. From 2015 to at least 2018, tens of thousands of consumers
`complained to Defendant that they were unable to cancel their ABCmouse
`memberships or that they did cancel their memberships but nevertheless were
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`COMPLAINT
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`Case 2:20-cv-07996 Document 1 Filed 09/01/20 Page 17 of 25 Page ID #:17
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`charged after cancellation. For example, one consumer complained that “Your
`website will not allow me to cancel my subscription. … I have gone through all the
`ridiculous questions about a dozen times, and the site does not allow me to finish
`the cancellation.” Another consumer, who had attempted to cancel an ABCmouse
`membership multiple times, complained, “I cancelled this account 3 times . . . . I
`had to request 2 ACH returns to get my money back after twice correctly
`cancelling my account including multiple emails and phone calls to
`abcmouse.com.” In November 2017, Defendant’s Vice President of Customer
`Support wrote to Defendant’s COO, two Vice Presidents of Marketing, President
`of Production, and Senior Director of Operations, noting a “dramatic increase in
`the amount of [customer support] tickets as well as the amount of phone calls”
`received by Defendant, and identifying consumer “confusion and/or inability to
`find and complete the cancellation on-line” as a “constant that has generated the
`large majority of all tickets since my arrival.”
`41. At least thousands of consumers complained about incurring
`unauthorized charges related to the Assessment Center even after canceling their
`base membership. Defendant tracked customer complaints related to this subject
`under the heading, “Customer Suggestion: Assessment Subscription should not
`require separate cancellation.” Instead of fixing the issue, however, Defendant
`developed and used a template customer support response stating, “We
`investigated this matter and discovered that although your ABCmouse subscription
`was cancelled, your subscription to the Assessment Center subscription [sic] had
`not been cancelled. Please note that your subscription and the Assessment Center
`add-on are separate features that require individual cancellation.”
`42. For years, Defendant recognized that its cancellation path was long,
`confusing, and not the “easy” process Defendant promised. For example, as early
`as 2015, in internal communications, Defendant acknowledged that the
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`COMPLAINT
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`“Cancellation Path is too long,” that the “Cancellation process is confusing,” and
`that an ABCmouse membership was “not easy to cancel like advertised.” That
`same year, Defendant’s Senior Director of Operations wrote:
`To improve customer experience / satisfaction, . . . I’d take a look at
`the impact of reducing the number of clicks in the online cancellation
`flow. I believe there are 8-9 clicks required currently, in order for a
`customer to successfully end their subscription.
`Instead of simplifying the cancellation mechanism, however,
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`Defendant created a customer support response script to respond to complaints
`from consumers who were billed after believing they had canceled. Thus, for
`several years, consumers who complained about billing after cancellation would
`receive an email from Defendant saying, “We show that you attempted to cancel
`the subscription, but did not successfully complete the process.” Defendant did not
`offer to cancel consumers’ memberships, but sent them back to the online
`cancellation path.
`44. Rather than take steps to make it easier for consumers to cancel their
`memberships, Defendant often made it more difficult. In April 2016, Defendant
`added two screens to the cancellation mechanism, which, Defendant found,
`resulted in a “lower cancellation percentage.” In May 2017, after Defendant’s
`Senior Design Director reported that, according to the customer support
`department, “the cancellation path is too hard to get to and get through,” Defendant
`changed its Parent Dashboard, including to make the “Cancellation Policy” link
`less prominent. Defendant later concluded that as a result of this change,
`cancellations “decreased by approximately 10%-15%.” In June 2017, shortly after
`this change was made, the same Senior Design Director reported that “the decrease
`of cancellation % of those entering the Parents Section to completion of the
`cancellation path.”
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`COMPLAINT
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`45. According to Defendant’s own data and records, from 2015 to 2018,
`hundreds of thousands of consumers who visited Defendant’s online cancellation
`path or otherwise contacted Defendant to cancel nevertheless remained subscribed.
`It was only after the FTC issued a Civil Investigative Demand to
`46.
`Defendant Age of Learning that the company modified its online cancellation
`mechanism. However, despite its modifications, Defendant’s cancellation
`mechanism continued to be located within a link to Defendant’s “Cancellation
`Policy;” continued to contain multiple screens that consumers had to navigate in
`order to cancel; continued to provide consumers with multiple links that if clicked,
`would take them out of the cancellation path without warning; and required as
`many as seven clicks to complete. Thus, consumers continued to complain that
`Defendant did not honor their cancellation requests.
`47. Even though Defendant knew of consumer confusion regarding its
`membership terms and cancellation mechanism, Defendant’s stated policy was that
`it did “not provide full or partial refunds.” Thus, Defendant’s restrictive refund
`policies compounded the consumer injury caused by its misleading memberships
`and its failure to provide a simple cancellation mechanism.
`48. Based on the facts and violations of law alleged in this Complaint, the
`FTC has reason to believe that Defendant is violating or is about to violate laws
`enforced by the Commission because, among other things: Defendant engaged in
`its unlawful acts and practices repeatedly over a period of at least three years;
`Defendant continued its unlawful acts or practices despite knowledge of tens of
`thousands of complaints; Defendant modified its unlawful conduct only after
`receiving a Civil Investigative Demand from the FTC; and Defendant remains in
`the business of selling negative-option online educational services and maintain the
`means, ability, and incentive to resume its unlawful conduct.
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`COMPLAINT
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`VIOLATIONS OF THE FTC ACT
`49. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or
`deceptive acts or practices in or affecting commerce.”
`50. Misrepresentations or deceptive omissions of material fact constitute
`deceptive acts or practices prohibited by Section 5(a) of the FTC Act.
`51. Acts or practices are unfair under Section 5 of the FTC Act if they
`cause or are likely to cause substantial injury to consumers tha