Last week, the Federal Trade Commission (FTC) issued a press release, announcing a $100 million settlement with Vonage, an internet-based telephone service company, for alleged violations of the Restore Online Shoppers' Confidence Act (ROSCA). The action underscores the FTC's continued focus on "dark patterns" and illustrates the agency's efforts to require companies to go beyond the plain requirements of ROSCA in enforcement settlements.
The FTC's complaint alleged that Vonage offered free trials to business and residential customers for telephone plans. Unless the customer took affirmative action to opt out before the trial ended, Vonage would enroll the customer in an autorenewing monthly phone plan.
According to the FTC, while Vonage made it very easy for customers to enroll in its services, it was difficult for those customers to cancel. Specifically, the complaint alleged that, although customers could sign up for services through a variety of channels, a customer could cancel only by speaking to a live agent on the phone.
Vonage allegedly complicated the cancellation process, according to the complaint, by obscuring the phone number on the company website, consistently failing to transfer calls to the retention agent, reducing the hours during which the agents were available, and financially incentivizing agents to dissuade cancellation attempts.
The FTC specifically identifies the above conduct as unlawful "digital dark patterns," design choices and psychological tactics the FTC believes are intended to subliminally influence a consumer's purchase decisions. The FTC claimed that Vonage's failure to adequately disclose the material terms of the offer (including the autorenewing nature of the offer), as well as its "dark pattern" cancellation practices, violated ROSCA.
Ultimately, Vonage agreed to a proposed court order, including $100 million in monetary relief that the FTC says it will use to refund consumers. The order contains several broad injunctive provisions that illustrate the FTC's aggressive approach to negative option marketing.
First, ROSCA does not require that the method of cancellation be the same as the method of enrollment (some state statutes do), only that the method of cancellation be simple. Indeed, that requirement was debated during ROSCA's consideration but ultimately was not included in the statute. Nevertheless, the Vonage settlement requires the company to provide the consumer with the same website, email address, or other application used for sign-up.
Second, the proposed order also prohibits Vonage from using "dark patterns" in its cancellation process. Although the proposed order defines a "dark pattern" as "a user interface that has the effect of impeding consumers' expression of preference, manipulating consumers into taking certain action or otherwise subverting consumers' choice," this is a largely subjective standard and begs the question: are all efforts to "save a sale" dark patterns and, thus, a violation of any final order?
Third, the order requires Vonage to send email confirmations immediately after an order is placed online and within two days of phone or mail orders. Again, this order confirmation is not found in ROSCA but is found in many state statutes.
This latest action confirms that the FTC will be aggressive in expanding its enforcement against dark patterns for companies using negative option marketing. Whether the requirements of the Vonage settlement are a harbinger of what the FTC will expect from other marketers remains to be seen.
The authors thank Jay V. Prapaisilp, a law clerk in Venable's Washington, DC office, for his assistance in writing this article.
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