Update October 30th, 11:47AM ET: The FTC has started sending out refunds to affected customers. The FTC notes that customers will receive checks by mail, while those without an address on file will receive a payment through PayPal.
On Thursday, the internet-based telecom provider Vonage agreed to pay $100 million to the Federal Trade Commission to settle charges that it created an artificially burdensome process to cancel the service that included hidden termination fees.
In its complaint, the FTC alleged that Vonage, an Ericsson subsidiary, made it easy for consumers to sign up for its services but far more difficult to cancel. Consumers could sign up for service in a variety of ways, including online and over the phone, but Vonage forced customers to speak with a live “retention agent” in order to cancel service.
Additionally, the FTC claimed Vonage purposefully hid the cancellation number on its website, limited the hours these cancellation calls were available, and failed to contact consumers who left callback numbers.
“Vonage made it easy to sign up but much harder to cancel, sometimes trapping consumers in an endless loop of call transfers”
“Vonage made it easy to sign up but much harder to cancel, sometimes trapping consumers in an endless loop of call transfers,” FTC Chair Lina Khan said in a statement on Twitter Thursday. “In some cases Vonage kept charging customers, or hit them with hidden early termination fees.”
In a public statement Thursday, the FTC framed the settlement as part of the agency’s commitment to fighting the use of “dark patterns,” a strategy many tech and telecom providers deploy to retain customers. Last year, the FTC put out a policy statement promising to go after companies caught using the methods to trap consumers in subscription services.
Dark patterns and “junk fees” have been a focus of consumer complaints over the last few years, especially in online ticketing services like Ticketmaster. Earlier this week, over 11,000 Taylor Swift fans signed a petition urging the Justice Department to investigate Ticketmaster for consistently abusing its “market power to screw over concert-goers, sports fans, artists, venues, and other ticket companies.”
After the FTC announced its Vonage settlement on Thursday, President Joe Biden said he’s instructed his administration to specifically target fee structures that take advantage of consumers.
“I know hidden junk fees — like processing fees on concert tickets — are a pain. They’re unfair, deceptive, and add up,” Biden said on Twitter. “That’s why, last week, I called on my Administration to crack down on these fees and put that money back in your pocket.”