Does your business offer subscription services? Learn about the FTC’s settlement with Chegg

Nowadays people can use subscription services for almost all areas of life: entertainment, food, gifts, fitness, education. These (often monthly) charges can add up, so if someone decides they want to cancel a subscription they should, well, be able to cancel it. Too often, consumers must navigate confusing and difficult cancellation processes to stop their subscriptions — which wastes time and costs them money. The FTC is committed to stopping unlawful subscription billing and cancellation practices. For a recent example, check out today’s settlement with the education technology company, Chegg.

According to the settlement, Chegg markets and sells educational products and services geared toward high school and college students. Among other things, the company offers a variety of online subscription services including study tools, homework help, and writing assistance.

The FTC alleges that Chegg failed to provide a simple mechanism to cancel recurring charges to parents and students. To locate the cancellation option online, parents and students needed to navigate through a number of (unintuitive) clicks and pages. Those that eventually found and began the cancellation process were then forced through another series of complicated and confusing page flows.

But the hoops and hurdles didn’t stop there. The FTC alleges that even after parents and students managed to complete Chegg’s lengthy cancellation process to stop their subscriptions, Chegg often continued to charge them. As a result, parents and students were stuck — sometimes for months on end — paying for subscriptions they didn’t want.

The FTC’s complaint alleges Chegg’s practices violated the Restore Online Shoppers' Confidence Act (ROSCA). To settle the case, the company will pay $7.5 million to affected consumers and must offer consumers a simple cancellation mechanism to stop subscription charges. The company also is prohibited from making misrepresentations regarding its cancellation process.

Does your business sell products or services through subscriptions? Know that the FTC is working to reinvigorate its fraud program and takes ROSCA violations seriously: do not deceive consumers signing up through negative option features. And make sure consumers know where to locate your cancellation method, and that the cancellation process is not confusing or difficult to use.

Learn more about the requirements of ROSCA.