FTC Lawsuit Against Online Bill Pay Platform To Proceed

On March 21, a federal judge in Washington state denied Doxo Inc.’s motion to dismiss a complaint brought by the Federal Trade Commission (FTC) regarding Doxo’s alleged deceptive advertising practices. The FTC’s complaint alleges that Doxo, a third-party online bill pay platform, violated the FTC Act and the Gramm-Leach-Bliley Act (GLB). Doxo provides a third-party bill-paying platform that touts that customers can “pay and manage all [their] bills with one login.”

The FTC alleged Doxo deceived consumers by giving the false impression it was the official payment channel for consumers’ billers and failing to adequately disclose fees being charged. The complaint also alleged Doxo violated the Restore Online Shoppers’ Confidence Act (ROSCA) by failing to clearly and conspicuously disclose material transaction and subscription terms and by failing to obtain informed consent from consumers before signing them up for a subscription service.

Doxo filed a motion to dismiss the FTC’s complaint in its entirety, arguing its disclosures were sufficient and its alleged subscription program did not constitute a “negative option” subject to regulation under ROSCA.

The court denied Doxo’s motion to dismiss, ruling that the FTC had adequately alleged all of the violations it set forth in its complaint. Specifically, the court ruled that Doxo’s use of light gray font and the placement of disclosures made the disclosures neither clear nor conspicuous.

With respect to the FTC’s subscription claims, the court ruled that the FTC alleged sufficient facts to plausibly claim Doxo violated ROSCA by failing to clearly and conspicuously disclose the material terms of the transaction. For example, free delivery for subscription members applies only for connected bank accounts. Members who pay using a credit or debit card still incur a $3.99 delivery fee. This distinction is not mentioned in the text of the subscription disclosure. The court also found that Doxo’s failure to disclose material terms precluded Doxo from obtaining consumers express informed consent as required by ROSCA.

The case continues to move through litigation, with the company’s counsel stating, “Doxo welcomes the opportunity to defend its business and customers in court.”