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Udemy Agrees to Pay $4 Million Settlement Over Deceptive Pricing Practices

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.

The screenshot displays Udemy’s Python section on the homepage, along with advertised discounts, as viewed in incognito mode.

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.

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.