Checking out the FTC’s $100 million settlement with Vonage

Who can forget the eerie admonition about Hotel California: “You can check out any time you like. But you can never leave.” It’s a feeling that may have been echoed by people who attempted to cancel their service with internet phone provider Vonage. In a $100 million settlement, the FTC alleges that Vonage thwarted the efforts of consumers and small businesses who to tried to cancel their service. It’s the latest action in the FTC’s ongoing battle against illegal hurdles, detours, roadblocks, and ruses often called “dark patterns.”

Vonage bills customers by charging their credit or debit cards or by withdrawing money directly from their bank accounts. Consumers typically pay between $5 and $50 per month, while business accounts could total thousands of dollars. According to the FTC, since at least 2015, Vonage took customers’ money, but failed to provide a simple method for people who wanted to cancel.

You’ll want to read the complaint for details, but here are examples of the conduct the FTC challenged as illegal.

Vonage made it easy to sign up for its services, but blocked all but one method for cancellation. Vonage offered people a variety of ways to sign up – including through its website or by calling a toll-free number. But starting in 2017, Vonage gave people one way – and only one way – to cancel: by speaking to a live “retention agent” on the phone. When people asked to cancel via email or web chat, the FTC says Vonage was unyielding, telling customers that the company “will not accept cancellation via email, fax, SMS or other electronic methods.”

Vonage set up roadblocks for reaching that one avenue for cancellation. According to the FTC, Vonage compounded the problem by making it tough for customers to connect with those “retention agents.” For starters, good luck trying to find the cancellation number on the company’s website. What’s more, if people called Vonage’s general customer service number in an effort to cancel, the company didn’t consistently transfer them to the right line. Instead, people found themselves stuck in a dizzying frustrating do-si-do. The FTC also says Vonage reduced the hours the cancellation line was available, resulting in lengthy waits and annoying dropped calls. The complaint offers some quotes from the earful Vonage was getting from its customers – for example, “It has been literally impossible to reach anybody at Vonage to cancel my account. I wait on hold to speak in a chat for 40 minutes, nobody answers. The phone system sends me around in loops indefinitely with no humans.” According to one internal email cited in the complaint, a Vonage employee said that customers were “sent in a circle when they want to downgrade or remove the service.”

Vonage charged people early termination fees that weren’t clearly disclosed. For customers who were eventually able to reach the cancellation line, the surprises weren’t over. The FTC says that in many instances, they were told they would have to cough up an unexpected early termination fee – sometimes totaling hundreds of dollars – that wasn’t clearly explained when they signed up with Vonage.

Vonage continued to charge people after they had cancelled. According to the complaint, after making it through Vonage’s daunting cancellation maze, some people continued to be charged even after expressing “I quit!” in the strongest possible terms. And when they contacted Vonage to complain about unauthorized post-cancellation charges, the FTC says many customers received only a partial refund.

The complaint alleges that Vonage’s conduct violated the FTC Act and ROSCA – the Restore Online Shoppers’ Confidence Act. To settle the case, Vonage will pay $100 million that will be used for refunds. In addition, under the proposed stipulated order, the company must implement a simple cancellation process that is easy to find, easy to use, and available through multiple channels. Vonage also must clearly explain the terms of its negative option programs up front, including an understandable explanation of what people need to do to avoid those charges, the total cost they’ll have to pay if they don’t take those steps, and a timeline for when they have to take those actions. The proposed order further requires the company to stop charging people without their express, informed consent.

With apologies to the Eagles, here are takeaway tips other companies should consider to ensure they aren’t running their own Hotel California.

“Relax, said the night man. We are programmed to receive.” Compare the resources you devote to signing up new customers with your efforts to make the cancellation process simple and seamless. If your company is “programmed to receive” while making cancellation a nightmare, you could find yourself in legal hot water. Make sure your “retention” efforts aren’t heavy on the “tension.”

“Last thing I remember, I was running for the door. I had to find the passage back to the place I was before.” Is there a better description of the frustration consumers experience when companies subject them to unfair or deceptive dark patterns? The FTC’s Bringing Dark Patterns to Light report describes many of the tactics that raise law enforcement concerns and emphasizes the FTC’s long-standing and ongoing commitment to combating illegal practices.

“What a nice surprise. Bring your alibis.” Unexpected fees are never a “nice surprise” and there are no “alibis” for a company’s failure to clearly explain fees and costs up front and to get consumers’ express consent before billing them.