The Federal Trade Commission (FTC) has stopped Vonage from charging “junk fees” and obstructing those who try to cancel their service, requiring the company to pay $100 million in refunds to consumers harmed by the company’s actions.
The company will also be required to make its cancellation process simple and transparent, and stop charging consumers without their consent.
The regulator alleges that the company used dark patterns to make it difficult for consumers to cancel and often continued to illegally charge them even after they spoke to an agent to request cancellation.
Vonage, a subsidiary of Ericsson, provides Voice over Internet Protocol (VoIP) to consumers and small businesses, with an increasing focus on business customers.
The FCC complaint said Vonage automatically bills customers monthly for these services, either by charging a credit or debit card or directly withdrawing money from a customer’s bank account. The charges are from $5 to around $50 each month for residential users, while business accounts could pay up to thousands of dollars each month.
In many cases, the company signs customers up using “negative option” plans that begin with a free trial, but require the customer to take action to end service before monthly charges started, the FCC said.
The complaint alleges that Vonage’s practices harmed consumers in numerous ways:
- Eliminating cancellation options: Despite allowing its customers to sign up for services online, over the phone, and through other venues, starting in 2017, Vonage started to force customers to cancel only by speaking to a live “retention agent” on the phone.
- Making the cancellation process difficult: In addition to forcing customers into one cancellation method, it created significant cancellation hurdles, including making it difficult to find the phone number on the company website, not consistently transferring customers to that number from the regular customer service number, offering reduced hours that the line was available and failing to provide promised callbacks.
- Surprising customers with junk fees when they tried to cancel: In many cases, customers who are able to access the cancellation line are told they will have to pay an unexpected early termination fee.
As a result of the FTC’s action, in addition to paying the refunds, Vonage has agreed to:
- Stop unauthorized charges: Vonage will be required to have consumers’ express, informed consent to charge them.
- Simplify cancellation: Vonage will be required to put in place a simple cancellation process that is easy to find and use
- Stop using dark patterns: Vonage will stop using dark patterns to frustrate consumers’ cancellation efforts.
- Be transparent about subscription plans: Vonage will be clear with customers about the terms of any negative option subscription plans, including any action that must be taken to avoid being charged.
“Today the FTC delivers on our commitment to protect consumers from illegal dark pattern tactics by companies that prevent consumers from canceling their services,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection, in a prepared statement. “This record-breaking settlement should remind companies that they must make cancellation easy or face serious legal consequences.”
