In July, the Eighth Circuit vacated the FTC's "Click to Cancel Rule." At the time, we noted that although the FTC was unlikely to try to resurrect the Rule, they could continue to challenge cancellation practices under other authority, including the Restore Online Shoppers' Confidence Act (or "ROSCA"). A settlement announced today illustrates that point, along with the words of Director of the Bureau of Consumer Protection Christopher Mufarrige who further stated: "As part of our effort to reinvigorate the agency's fraud program, the FTC will continue enforcing ROSCA against online sellers where they violate this important statute."
Chegg offers educational products and services geared toward high school and college students. Among other things, the company offers various online subscription services including study tools, homework help, and writing assistance. The FTC alleged that Chegg made cancelling those services unnecessarily difficult, in violation of ROSCA's requirement for a simple cancellation mechanism.
More specifically, the FTC alleged that subscribers who wanted to cancel had to navigate through various unintuitive links on Chegg's website to even find the cancellation page. Consumers that eventually found that page were then forced through another complicated and confusing page flow which for some brands included several save attempts before and after a survey page. Moreover, some of the consumers who managed to successfully navigate the flow continued to get charged after cancellation.
Under the FTC's proposed order, Chegg will pay $7.5 million, which will be used to provide refunds to consumers impacted by Chegg's cancellation practices. (Coincidentally, that's the same amount that HelloFresh recently agreed to pay to settle an investigation related to its subscription practices.) The order also requires that Chegg maintain simple cancellation mechanisms for negative option features, requiring the mechanism be "at least as easy to use as the mechanism the consumer used to consent".
If you haven't looked at your cancellation practices to see how they comply with ROSCA and the growing patchwork of state laws, now may be the time to do so. Make sure that consumers can easily find the cancellation mechanism, that it's simple to use, and that you process cancellations in a timely manner.
If you're not sure about how your process is working, check your complaints, both the ones you receive internally and the ones you may receive through other sources, like the BBB. Like many other companies who have gotten in trouble in this area, the FTC alleged that Chegg had received many complaints that should have served as an indication that the process wasn't working. And if you have already been on the FTC's radar before, as Chegg was from an unrelated 2022 data breach settlement, make sure you are buttoned up on all fronts.
We expect this type of enforcement to continue, on both the federal and state levels.
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