The Italian Competition Authority fines GoFundMe for the hidden costs in donations

With a decision published on 18 December 2020, the Italian Competition Authority (ICA) fined the company GoFundMe Ireland Ltd for unfair commercial practices against consumers, concerning the management of some online fundraising campaigns between 2018 and 2020.

The ICA contested GoFundMe two unfair commercial practices. The first practice concerned the advertising as “free of charge” of fundraising campaigns managed by the GoFundMe platform, whereby consumers could make donations to contribute in response to emergency situations. However, as the ICA had ascertained during its investigations, the information provided by GoFundMe about the absence of costs to make donations was misleading. In fact, firstly, there were costs for each transaction with credit or debit cards, the amounts of which were deducted from the donated amount; in addition, GoFundMe charged a fee of 10-15% for each donation, which was added to the donated amount, as an additional expense payable by the consumer.  

In this regard, the ICA noted that the consumer was not properly informed about the presence of such additional costs and she/he was even led to believe that the service provided was free: in fact, only a footnote in small font – flagged by an asterisk on the homepage of the platform website – specified the application of the standard tariffs for transactions with a bank card.  Apart from the small footnote, the other information provided on the platform website led the consumer to believe the absence of costs for the fundraising service. In this context, the ICA specified that the consumer who takes part in those charity campaigns might not necessarily be familiar with browsing the internet. Therefore, the ICA continues, the information burden on the professional is particularly relevant if the consumer chooses to make a donation, as in the present case. In fact, it is quite clear that in such cases the consumer makes an economic choice without compensation, motivated by the intention of making his own contribution for charitable purposes which are often related to emergency situations and which therefore require a fast disbursement. All this may therefore result in a lower degree of attention by the consumer willing to make a donation, who thinks she/he has a limited time, so that she/he is led to not pay special attention to other graphic elements which may alter his economic choice, particularly in the case of low-value donations.  In conclusion, according to the ICA, the providing of untrue information and the omission of relevant information about the costs of the service constitutes a violation of Articles 21 and 22 of the Consumer Code concerning misleading practices, i.e. commercial practices that are capable of deceiving the consumer on the essential aspects and costs of the service provided.

The second practice concerned the pre-setting of the above 10-15% fee for each donation in favour of the platform, during the insertion of the donation amount by the consumer; the latter, in fact, could have cancelled this fee or changed its amount – with several steps – only if he had noticed the addition of such a fee before he completed the payment. The presence of this opt-out mechanism to deselect the pre-set amount of the fee, notes the ICA, does not violate the Consumer Code in itself. However, according to the ICA, the fact that such a mechanism is not easy to activate does not allow the consumer to freely choose whether to pay the fee to the platform. This is particularly true when the consumer has to make a decision in a short time, as in the case of fundraising campaigns for emergency situations. Even in this case, given the nature of making donations in response to emergency situations, it must be considered that the consumer could pay less attention to the mechanisms of the platform and he could tend to spend his own financial resources more easily. Therefore, the ICA concluded that the context in which the platform adopted a pre-setting mechanism of the fees “results in an undue influence of the consumer; the latter may not even notice its existence and if he notices, he is not able to easily and promptly delete the corresponding amount, that is instead automatically added to the amount inserted for the donation”.

As for this practice, therefore, the ICA contested the violation of Articles 24 and 25 of the Consumer Code concerning aggressive practices, which restrict the consumers’ contractual freedom with undue influence, causing them to take a commercial decision (in the present case, the payment of a fixed fee for the platform in addition to the donation) that they would not otherwise have taken. As evidence of this undue influence, the ICA noted that after the removal of the pre-setting mechanism as a result of the precautionary measures adopted during the proceedings, nearly 90 % of consumers did not choose to pay any fee in favour of the platform. On the contrary, before the adoption of such precautionary measures, more than 50 % of consumers did not change the pre-set fee before making the donation.   

Finally, in light of the above, the ICA fined GoFundMe 600.000 Euros for the misleading practice concerning the costs of the service provided and 900.000 Euros for the aggressive practice concerning the pre-setting mechanism in favour of the platform for each consumer’s donation.