This week, the Federal Trade Commission (FTC) filed a lawsuit in federal court against rideshare and delivery company Uber for allegedly deceptive subscription practices, including making it unreasonably difficult to cancel.
In the accompanying press release, FTC Chair Andrew Ferguson made clear that regulatory scrutiny of negative option and continuity programs will remain a priority: “Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel. The Trump-Vance FTC is fighting back on behalf of the American people.” The agency voted 2-0-1 to file the complaint, with Commissioner Mark R. Meador recused.
In the case, the FTC is seeking a permanent injunction and monetary relief under the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). This action is further evidence that the agency likely plans to aggressively enforce its Negative Option Rule. As we’ve discussed, the new rule’s disclosure, consent, and cancellation requirements will take effect May 11.
The lawsuit centers on the Uber One subscription that the company offers for an automatically recurring monthly or annual fee after a discounted or introductory offer. The complaint alleges that consumers were unknowingly enrolled into Uber One because the material autorenewal terms were insufficiently disclosed via small, difficult-to-see text. The FTC asserted that Uber pushed consumers to enroll through various means, such as by offering savings on rides.
According to the complaint, when consumers attempted to cancel, they faced numerous confusing screens. For instance, Uber’s interface did not mention the word “subscription” or similar words, placed the cancellation navigation buttons toward the bottom of the screen, and blended the cancellation mechanism into the background, making it difficult for consumers to submit cancellation requests. When consumers did manage to request cancellation, Uber allegedly inserted multiple retention offers, such as an option to “pause” Uber One or accept an additional discount. Consumers also were required to fill out a survey explaining their reason for canceling.
The FTC also noted other alleged deceptive acts and practices, including:
- Promising consumers that Uber One would save consumers specific dollar amounts over time, despite many consumers not seeing any savings, and failing to calculate the savings amount in a way that accounted for the subscription fee
- Failing to properly disclose that consumers were required to cancel 48 hours before their renewal date and making “cancel anytime” claims, despite requiring customers to cancel in advance of the renewal date
- Charging the consumer up to 48 hours before such date, which led some consumers to be charged for another billing cycle before their renewal date
Companies hoping for a relaxed regulatory environment for negative options and subscription services are likely to be disappointed. With the Negative Option Rule’s impending deadline for full compliance and the potential for a $53,088 fine per violation of that rule, a thorough review of your autorenewal offerings is warranted.
