Udemy Agrees to Pay $4 Million Settlement Over Deceptive Pricing Practices
If a sale is permanent, is it really a sale? Udemy settles class action lawsuit related to its discount strategy.
UPDATE 5/19: If you made purchases from Udemy.com between August 23, 2017 and April 21, 2023, you may be eligible to receive a cash payment of four dollars ($4.00) for every course purchased from Udemy up to forty dollars ($40.00). More details here: https://www.pricepromotionsettlement.com/
It is well-known among Udemy learners that the list price of a course is not what you have to pay. Udemy is famous for its deals, and most learners purchase courses at a discount.
Looking at my own purchase history, I’ve bought 15 courses since 2013, and the maximum I’ve paid for a single course is $19 (this was for the first course I bought). Class Central analyzed Udemy’s catalog and found that 90% of its courses require payment, with prices ranging from $19.99 to $199.99.
However, Udemy’s IPO filings and annual reports do not mention deals and discounts. Instead, they refer to “machine learning algorithms” that determine course prices.
Our ML pricing algorithms determine how much we charge for our courses in our marketplace on a per-country basis, taking into account dozens of course characteristics, including category of content, hours of content, course rating, and popularity.
According to lawyer Rob Freund (@RobertFreundLaw on Twitter) “using fake reference prices to run sales is illegal under the FTC Act and California’s laws.” Class Central previously wrote about six deceptive marketing practices from education companies in China, one of which was about advertising deceptive discounts.
Udemy has agreed to pay $4,000,000 to settle a case alleging it advertised fake discounts for its courses.
Remember: using fake reference prices to run sales is illegal under the FTC Act and California's laws. 1/ pic.twitter.com/faqA2tu9An
— Rob Freund (@RobertFreundLaw) April 28, 2023
This was the subject of a class action lawsuit filed against Udemy in the US District Court for the Northern District of California for alleged violations of California’s unfair competition and false advertising statutes in connection with its pricing practices.
According to Udemy’s 2022 Annual Report, the parties entered into a definitive settlement agreement for an immaterial amount.
| Total | Consumer | Business | Net Loss | |
| 2019 | $276.3M | $225.5M | $50.9M | -$69.7M |
| 2020 | $429.9M | $326.4M | $103.4M | -$77.6M |
| 2021 | $515.6M | $328.7M | $187M | -$80M |
| 2022 | $629.1M | $315.0M | $314.0M | -$153.9M |
Freund discovered that the “immaterial amount” turned out to be $4 million, less than 1% of Udemy’s 2022 revenue of $629M.
Udemy’s own data reveals that the average paid learner spent $19.5 in 2022. At least in North America, Udemy’s lowest paid course starts at $19.99.
| Monthly Avg Buyers | Avg Revenue per Buyer | |
| 2022 | 1.336M | $19.5 |
| 2021 | 1.345M | $20.4 |
| 2020 | 1.439M | $18.9 |
| 2019 | 0.962M | $19.5 |
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john grillot
bunch of b.s. I like them. The attorneys get all the bucks. whoopi I can get$ 4.00.
Daryl
I agree. This is stupid. I paid the price I was willing to pay for a Udemy course; I don’t need the government telling me I’ve been taken advantage of unless I was actually lied to about something when I made the purchase. I don’t see any deception, just an apparently effective marketing gimmick I find annoying.
Maybe somebody actually paid $200 for a course and felt buyer’s remorse afterward. Do your research before spending $200. That’s actually proof it’s not a fake reference price, because you can really spend the full price for the course if you don’t wait for the sale.
Besides every other company is always telling me I’m getting this or that at a $200 discount or something, just to make me feel good about buying. They’re like:
Wednesday -> $799
Thursday -> $799
Black Friday -> Discounted from $999 to just $799!
Udemy is playing the same game as everybody else.
Logi
It wasn’t the government that started this lawsuit.
Fair
Government, in this instance, had nothing to do with it. Marion Williams sued Udemy.
Ryan
You know the government sets the rules by which you can sue and prevail?
Ryan's a dumbass
The government sets the rules by which everyone can sue. They also set the rules that protect you as a citizen. Blame them some more, until you have to sue someone, then realize how important a governing body is.
Harold Bullock
I purchased an EV course and believe I received what I paid for. Udemy did not scam me. They delivered on what was promised. Looking forward to taking more Udemy classes.
Chris
I’m glad to see this. It’s like thinking your Mom is a virgin. Um, not exactly. I take Udemy courses and have for a while. Have no complaints, except for once in a while an instructor whose accent I cannot defeat.
funkaholic
Haha ain’t that the truth, or they are so long winded you get bored of the material early.
Brown
Yes. I agree wholeheartedly
Ian
I just saw an email for my share of the payout, only about $8, but the messed up part is that it’s offered in credits – so the money that they owe me I only have the option to give it back to them or it will just sit dormant in their account forever. Who wrote that deal?
Chris
It’s messed up how the wealthier side in any lawsuit can force a settlement by making things prohibitively expensive for the other side (by dragging things out). You can get away with just about anything in this county with deep enough pockets.
MP
Thanks for the breakdown. I wasn’t sure what was going on with this case. I just submitted my claims todays.
Surya
So the lawyers don’t want hard up learners to purchase courses at cheap prices?
ET
And what about all the people who took the course for 29 days then got the refund? I’m sure no one set up a video recorder and recorded the course before getting a refund. I think Udemy has been a blessing for education. I purchased the personal plan because there is so much you can learn on this site and a lot of the courses are much better than an overpriced college course.
Christopher P. Hoak
Udemy really has been a blessing for education, I agree 100%. Everyone since the beginning of time has marketed everything this way… How are they guilty of anything? They should be lauded for stripping off the tremendous overhead, fluff and bluff that colleges append to everything.
Cholly Pahkahkah
Now do tire stores in the U.S.
David
Anybody ever shop at Kohl’s? Same principle: nothing is ever sold at list price and they are always giving you “Kohl’s Cash.” You buy a cheap “dress” shirt for $40, regular price $120 and get $10 Kohl’s cash. Product is worth $30. No one with half a brain buys the shirt at $120.
I think the difference here is that udemy employed “smoke and mirrors” about the pricing being set by some fancy ML algorithm, when it’s probably more like: display_price = price * 10 * rand(x). And arguably the “victim” is not the consumer, but investors who were misled into believing that average sales price could be 10x and that would scale, etc.
I bought some stock at their IPO price and will hold for a few years because I think their platform is solid, the demand for this content is strong, and eventually I think it will take off or be acquired. I’m still buying their $13-18 content and find their platform/usability superior to other online learning tools. The biggest problem is that nobody follows through taking all the classes, but you can get at least $20 value out of most courses.
Christopher P. Hoak
Totally true, all the way around, I love the Kohl’s analogy… Great post! Now, I’ve got to get back to to Udemy to complete those couple of classes that I’ve left hanging.
JC
people shouldnt let these snake lawyers get rich, and using people for something they didnt even know about, most people who buy at $200 prices do it intentionally to help out the author of the course.
what a moron the guy who sued it, he will get $40 at most? and the snakes hundreds of thousands.
Daniel
The email to users says, “the Named Plaintiff (Marion Williams) who will request for $2,500 for his service. “
Jorge Pinkus
Have you ever bought a pizza at standard price? How about booking a hotel room at the registration desk rack price? Or a plane ticket at full price?
This is a silly, silly lawsuit: “hey, I bought a course at $19.90, but it says the original/normal price is $100. I did not pay $100, but I’ve been lied! Give me back my $4”
Daniel
If you read the article, you’d understand that the original/normal price is fake. Udemy never offered the course at that price, only at the “discounted” price. Pretending to offer a discount is illegal, and rightly so.
Pizza is offered at an original price. Hotel rooms are offered at a normal price. Plane tickets are offered at a normal price. Udemy courses never were.
Ziku
They did technically do this, every course advertised on the website was sold at a huge discount. To get the discounted price you would usually need to just create a new account. They used a fake countdown clock to make it seem like it was some temporary sale, but as long as you created a new account you could get the heavily discounted price.
Roger
This is fraud…all of these idiots who like being ripped off make me laugh. These courses are no different than music downloads. The professors record one lecture —-and attempt to charge every student a $300 full price? lol. For the same reason music downloads are $.99 cents…and now available per subscription —is why this lawsuit had legs.
Joe DELAVEGA
What is going on, everybody, what’s to sue and get money? I am incredibly happy with Udemy. They are very upfront with all their prices, just wait until you get a promotional discount and buy the course you want. Their courses and so good I keep buying them and will keep doing so. Enough with all those people trying to take advantage to get more money. They don’t realize that the ones who get all the money are the lawyers. We should sue the lawyers and have them pay too.
Paul O.
It crazy that the receiver appointed to handle this case smiled home to the banks while the supposedly affected learners are paid peanuts. I was going to lead the fight against such a useless and unnecessary law suit because it ONLY benefits the receiver and the system that sued. Whoever sued Udemy for whatever reason needs to understand that Udemy does the masses a whole lot of favor! Hope the inept person or group of persons that filed this lawsuit got their $4 or $40 at most for such a warp decision.
sepehr salsabili
Udemy is one of the most shady companies in the education industry. They deceive people to pay and then just steal your money. Im from Iran, and they offered me to pay by my national bank account for a course. It was too much money for me and I could get it from Coursera but I was paying straight from my bank account which was nice However after 2 weeks they emailed me you violated our laws and banned my account they accept money from Iranian banks and then just remember it is illegal? shameless thieves..
I was furious and asked for a refund they refused asked for the content of my course they refused…
I bet they were involved in some shady business. They are getting what they deserve…
Paulo
Udemy marketing strategy is deceptive in so many ways like their subscription leading to believe you get all content. You still need to pay extra for the remianing content at the very same price if with no subsciption at all. So, bottom line, they are using fake discount prices all the time and the subsciption is worthless. Learn what you need consume discrelty and that’s it. There is little value. The content i used has questionable quality. Lot’s of audio where you hear the instructor hitting the keyboard, echo… you name it. There is no quality assurance in this platform.