If you're going to create a mobile app that offers monetary rewards for meeting fitness goals, you should probably make sure you back your promises up. The Pact fitness app offers users a way to incentivize workouts by charging a fee when users miss their fitness goals. If goals are met, the app also promises to pay a share of the punishment fees with successful members. According to the FTC, who filed a complaint against the developer Thursday, tens of thousands of Pact users have been charged the penalty, even when they met their goals or canceled the service. The Commission also said that none of the users received a payout, either. The developer has now settled the case with the FTC for more than $940,000.
"Consumers who used this app expected the defendants to pay them rewards when they achieved their health-related goals, and to charge them only when they did not," said the Bureau of Consumer Protection's Tom Pahl in a statement. "Unfortunately, even when consumers held up their end of the deal, Pact failed to make good on its promises." The FTC also claims that Pact didn't adequately tell its members how to cancel the service and stop recurring charges.
The FTC claimed that Pact, Inc. engaged in unfair and deceptive practices that violated the FTC Act and the Restore Online Shopper's Confidence Act, or ROSCA, which prohibits charging consumers without it being clearly disclosed. The settlement makes it so that the defendants cannot continue to charge their customers without a "clearly and conspicuously" disclosure. Pact customers who were wrongfully charged will get more than $940,000 in refunds, as part of a $1.5 million settlement overall (the discrepancy in final amount and the refund amount has been suspended). The company must notify customers and complete payments within 30 days of the settlement order.