Companies that care about avoiding Federal Trade Commission (FTC) action should take heed. Last month, the FTC announced an $8.5 million settlementwith Care.com, resolving claims challenging its advertising claims and automatic renewal program.
The challenge demonstrates the FTC's willingness to use the Restore Online Shoppers' Confidence Act (ROSCA) to target advertising claims.
Care.com offers a platform connecting job posters and job seekers. Users sign up as basic members or premium members. According to the FTC's complaint, basic members could create job postings, but only premium members could hire. The FTC alleged that Care.com's advertising inflated the number of jobs available on its site by including jobs "for which there is little to no chance a job seeker could be hired."
Care.com allegedly engaged in these tactics to induce consumers to sign up for and stay in auto-renewing premium subscriptions. By inflating the number of jobs available and earnings rate on its website and advertising materials, Care.com allegedly misled consumers into believing that there were plenty of jobs available in their area.
Alleged Dark Patterns and Cancellation Issues
The FTC also claimed that Care.com overburdened consumers who wished to cancel their auto renewal subscriptions, especially for premium members. To cancel, the FTC alleged, members had to navigate through a series of cancellation pages and surveys. The complaint also described a series of "inconspicuous" buttons that often blended in with the page to continue through the multistep cancellation process. According to the FTC, this resulted in many consumers thinking that they had successfully canceled but continued to be charged for the subscription.
Despite these allegations, the settlement does not require Care.com to implement a "one-click cancellation" mechanism that the FTC proposed in the Negative Option Rule. Perhaps this reflects the FTC's acquiescence that no "one-click cancellation" method is currently required by law (though courts are currently working through this issue).
Earnings Claims and Previous Notice of Penalty Offenses
The complaint also alleged that Care.com lacked substantiation when advertising how much money users can earn on the platform. The FTC claimed that Care.com provided earnings statistics on its website and advertising materials despite never monitoring those numbers, for example, because it did not track or know the number of providers who found a job through its website or the hourly wages earned through the platform.
In 2021, the FTC had sent Care.com a Notice of Penalty Offenses concerning Money-Making Opportunities. Thus, the complaint also alleged that Care.com continued to engage in deceptive conduct despite being on notice that these practices violated the law.
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