According to the FTC’s complaint, filed Nov. 3 in U.S. District Court for the District of New Jersey, Vonage bills its customers for its services automatically each month, either by charging a credit or debit card or withdrawing money from a customer’s bank account directly. Consumer accounts ranged from $5 to around $50 each month, while business accounts could cost up to thousands of dollars each month.
In many cases, the FTC said, Vonage signed customers up using “negative option” plans that begin with a free trial but required the customer to take action to avoid being charged. The FTC’s complaint alleges that, while Vonage has provided numerous ways to easily sign up for their plans, it “made the cancellation process markedly more difficult, leaving consumers and businesses on the hook for services they no longer want.”
Harmful Consumer Practices
Vonage’s practices, the FTC complaint alleged, harmed consumers in numerous ways, specifically by:
- Eliminating cancellation options: Despite allowing its customers to sign up for services online, over the phone, and through other venues, the complaint alleges that starting in 2017, Vonage made the decision to force customers to cancel only by speaking to a live “retention agent” on the phone.
- Making cancellation process difficult: In addition to forcing customers into one cancellation method, Vonage “created significant cancellation hurdles, including by making it difficult to find the phone number on the company website, not consistently transferring customers to that number from the normal customer service number, offering reduced hours the line was available and failing to provide promised callbacks,” the FTC said.
- 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 that was not clearly disclosed when they signed up for Vonage service,” the FTC said. “In some cases, these fees were in the hundreds of dollars.”
- Continuing to charge customers even after they canceled: “Customers who managed to speak to an agent and request cancellation often found that their accounts continued to be charged,” the FTC said. “Even when they contacted Vonage to complain, they received only partial refunds of the money they were charged without authorization.
Settlement Terms
In addition to paying the $100 million settlement in refunds to customers, Vonage has agreed under a proposed court order filed the same day as the FTC complaint, to engage in the following remediation measures:
- 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, easy to use, and will be available through the same method the consumer used to enroll (e.g., website, email address, or other application).
- Stop using dark patterns: The order prohibits Vonage from using dark patterns to frustrate consumers’ cancellation efforts.
- Be upfront with consumers about subscription plans: The order requires Vonage to be upfront with customers about the terms of any negative option subscription plans, including any action that must be taken to avoid being charged and timeline in which that action is required.
“This record-breaking settlement should remind companies that they must make cancellation easy or face serious legal consequences,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.