The Federal Trade Commission protects e-commerce consumers from \u201cdark pattern\u201d tactics which prevent consumers from cancelling their services.\u00a0 Vonage agreed to pay $100 million \u2013 a record-breaking settlement amount \u2013 to the FTC to settle charges that it created a series of obstacles for its customers \u2013 both residential and business consumers \u2013 to cancel their service which included hidden termination fees.<\/p>\n
In its Complaint filed in the United States District Court for the District of New Jersey on November 3, 2022, the FTC alleged that Vonage made it very easy to sign up but much harder to cancel a subscription contract, including by:<\/p>\n
In its Complaint, the FTC alleged that these actions violated Sections 13(b) and 19 of the Federal Trade Commission Act, 15 \u00a7U.S.C. 53(b), 57(b), and Section 5 of the Restore Online Shoppers\u2019 Confidence Act (\u201cROSCA\u201d), 15 U.S.C. \u00a7 8404.<\/p>\n
ROSCA was passed and effective in 2010 in order to help promote consumer confidence for online commerce and thus requires the Internet to provide accurate information and give sellers an opportunity to fairly compete with one another for consumers\u2019 business.\u00a0 Section 2 of ROSCA, 15 U.S.C. \u00a7 8401.<\/p>\n
Section 4 of ROSCA, 15 U.S.C. \u00a7 8403, generally prohibits charging consumers for goods and services sold in transactions effected on the Internet through a negative option feature, as that term is defined in the Commission\u2019s Telemarketing Sales Rule (\u201cTSR\u201d), 16 C.F.R. \u00a7 310.2(w), unless the seller, among other things, (1) provides text that clearly and conspicuously discloses all material terms of the transaction before obtaining the consumer\u2019s billing information, (2) obtains the consumer\u2019s express informed consent for the charges, and (3) provides simple mechanisms for a consumer to stop recurring charges.\u00a0 The TSR defines a negative option feature as a provision in an offer or agreement to sell or provide any goods or services \u201cunder which the consumer\u2019s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer.\u201d\u00a0 16 C.F.R. \u00a7 310.2(u).<\/p>\n
In the Complaint, the FTC alleged that Vonage violated ROSCA by failing to:<\/p>\n
Federal Trade Commission v. Vonage Holdings Corp., et al.<\/em>, No. 3:22-cv-06435 (D.N.J. Nov. 3, 2022).\u00a0 The FTC will use the $100 million settlement to provide refunds to Vonage consumers.<\/p>\n ABCmouse – disclosure membership terms<\/span>:\u00a0 Similarly, in an earlier case, the FTC filed a Complaint against Age of Learning, Inc., which operates the children online learning program ABCmouse.\u00a0 Federal Trade Commission v. Age of Learning, Inc., a corporation also d\/b\/a ABCmouse and ABCmouse.com<\/em>, No. 2:20-cv-7996 (C.D. Cal. Sept. 1, 2020).\u00a0 In that case, the FTC asserted that Defendant failed to disclose membership terms which led to consumers being charged without their consent, and the FTC settled with Defendant for $10 million.<\/p>\n Swifties and concertgoers – petition against Ticketmaster<\/span>:\u00a0 As recently as last week, Taylor Swift fans (a\/k\/a Swifties) and concertgoers petitioned for an investigation regarding fees charged and processes of the website operated by Ticketmaster.\u00a0 Stay tuned!<\/p>\n In sum, companies should evaluate their e-commerce disclosures, fee structures, and process for providing\/ending service.<\/p>\n","protected":false},"excerpt":{"rendered":" The Federal Trade Commission protects e-commerce consumers from \u201cdark pattern\u201d tactics which prevent consumers from cancelling their services.\u00a0 Vonage agreed to pay $100 million \u2013 a record-breaking settlement amount \u2013 to the FTC to settle charges that it created a series of obstacles for its customers \u2013 both residential and business consumers \u2013 to cancel … <\/p>\n