Vonage to Pay $100M Settlement in FTC Subscription Fee Lawsuit
The Federal Trade Commission (FTC) is holding internet phone service provider Vonage accountable for its junk fees levied on subscribers in a $100 million lawsuit settlement.
Vonage was acquired by Ericsson nearly a year ago in a $6.2 billion deal, and since that acquisition has faced FTC pushback after it was found that the company allegedly created obstacles to prevent customers from stopping recurring charges for its phone services.
In a press release from the FTC on Thursday (Nov. 3), the commission alleged that Vonage also used dark patterns to continue illegally charging subscribers even after they spoke to an agent directly and requested cancellation.
It also noted that when a customer signs up for Vonage’s services, it could be done using “negative option” plans that begin with a free trial, but require the customer to take action to avoid being charged.
As a result of the lawsuit, a proposed court order was issued stating the company not only must pay a $100 million settlement to be used for customer refunds, but also has agreed to stop unauthorized charges, simplify the cancellation process, stop using dark patterns to frustrate customers, and be upfront about subscription plans.
Samuel Levine, director of the FTC's Bureau of Consumer Protection, said in the settlement announcement: “This record-breaking settlement should remind companies that they must make cancellation easy or face serious legal consequences.”
PYMNTS has reached out to Ericsson, Vonage’s owner, for comment.
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