'Pact' Health App Breaks Pact, Settles With FTC

Pact, Inc. settled charges with the FTC on September 21, 2017 that the mobile software application company engaged in deceptive acts and practices, unfair billing practices, and failure to disclose material terms relating to its Pact app.

The Pact app is premised on paying members that complete health-related weekly "pacts" with funds generated by users that fail to do so. Members set targets and penalty amounts between five and fifty dollars in case they break the pact. For example, GymPacts involves committing to exercise a specified number of times per week and VeggiePacts involves committing to eat a specified number of fruit and vegetables per week. Pacts automatically renew on Monday nights, and the app assured consumers it would never charge them unless they fail to complete a pact. According to the complaint, Pact, Inc. did not pay consumers for successfully-completed pacts—and in some cases charged them—and continuously charged consumers after cancellation.

In addition to deceptive acts and practices and unfair billing practices, the FTC charged Pact, Inc. with a specific violation of section 4 of the Restore Online Shoppers' Confidence Act (ROSCA) due to the Pact app's negative option feature, defined by FTC Telemarketing Sales Rules as a provision in which consumer silence or failure to take affirmative action operates as acceptance. 16 C.F.R. § 310.2(w). Information regarding recurring charges...