Aaron M. Sprecher via AP
As things stand, the Federal Trade Commission’s ‘click-to-cancel’ rule will go into effect on May 14. Passed during the Biden administration when Lina Khan was chair, the rule requires companies that offer subscriptions to make it as easy to cancel as it is to sign up. Though trade groups for internet, cable, and other businesses tried to overturn the rule in federal court, it has so far survived these efforts.
The vote to finalize the click-to-cancel rule was 3-2; Republicans Andrew Ferguson and Melissa Holyoak voted against it. Yet on Monday, those same commissioners voted to sue Uber over allegations that, if true, are demonstrable violations of that same click-to-cancel rule.
“Uber not only deceived consumers about their subscriptions, but also made it unreasonably difficult for customers to cancel,” Ferguson said in a statement, citing a byzantine process for canceling Uber One, a subscription-based service for frequent Uber users that offers discounts on rides and food deliveries. In certain circumstances, it can take as many as 23 screens and 32 actions to actually cancel Uber One, according to the lawsuit.
Uber denied to The Wall Street Journal that it is difficult to cancel the Uber One subscription.
The lawsuit, which based on some of the dates cited was clearly put together under Khan’s tenure, is primarily evidence of why we could use the rule that Ferguson and Holyoak voted against. It shows the lengths to which businesses will go to capture and trap customers.
Uber One is advertised as a feature that can save subscribers $25 a month, which customers can cancel anytime “without fees or penalties.” According to the FTC, the savings claim isn’t true unless you ignore the cost of the subscription, which is $9.99 a month or $96 a year. The subscription automatically renews.
Typically, Uber One is sold as part of a free trial, either on the Uber app, its website, or through partnerships with credit card companies, which eventually converts to an auto-renewal. One click gets you the subscription; Uber doesn’t ask for billing information because it already has it for anyone with an account.
The FTC reports that numerous customers found themselves signed up for Uber One without their knowledge, and that the billing cycle begins before the free trial ends. Because Uber One shuts off immediately when canceled, the FTC asserts, “consumers are therefore incentivized to wait until the last day of their trial before initiating cancellation, by which point Uber has already billed them.” But that’s if subscribers can figure out how to cancel at all.
The normal cancellation cycle involves these steps: Opening the app, clicking on the “Account” tab, scrolling down to Uber One and clicking on that, scrolling down to “manage membership” and clicking on that, scrolling down to “end membership” and clicking on that, answering “why do you want to end your membership?” (a question you have to answer with one of the samples provided and then click “continue,” while avoiding a “Keep Uber One” button), answering “Want to pause your membership instead?” by clicking on a small “No thanks” button instead of the bigger “Pause Uber One” button, then declining an offer to “Get 90% off your next month if you stay!” and clicking “End Uber One.”
The FTC reports that numerous customers found themselves signed up for Uber One without their knowledge, and that the billing cycle begins before the free trial ends.
That incorporates seven choice screens, and only on the fourth one is there any mention of cancellation. “Dark patterns” meant to confuse customers are prevalent; buttons asking customers to stay on Uber One are more prominent, and the buttons that continue the cancellation process keep changing places, making it easy for customers to make a mistake and have to start over.
Within 48 hours of the end of the billing cycle, the “end membership” button is not visible, and in-app cancellations are not processed. A new screen creates an endless loop that will never advance to a cancel screen. Customers seeking to cancel must contact Uber support within the app, an option that was not provided until the FTC initiated its investigation.
The gauntlet for the Uber support option involves 23 choice screens in all. Customers have to find the help screen, navigate through to leave a message for Uber support, and then repeat all steps starting from the home screen again, culminating in entering a chat with a support representative who can take as long as a full day to process the cancellation, by which point a new billing cycle may have started. According to the lawsuit, Uber “always” charged customers for an extra month, the FTC alleges, despite sending a message stating, “Moving forward, you will not be charged for Uber One.”
The 48-hour “cancellation black hole,” as it’s termed, is only mentioned in fine print once on the app. And if users try to request refunds for the money charged, they often cannot succeed. Incredibly, the FTC found that even if customers cancel their credit cards to get out of subscriptions to Uber One, Uber will find any payment method ever associated with the account and charge that.
The suit does not mention the click-to-cancel rule; it uses the FTC’s general prohibition on unfair and deceptive acts and practices, as well as the Restore Online Shoppers’ Confidence Act (ROSCA) of 2010. But most of what Uber is accused of here was in the click-to-cancel rule.
The rule applies to so-called “negative option” subscription marketing, including free trial offers, which were the routine sales technique for Uber One. The offer’s language cannot be misleading; a primary selling point of Uber One is that people can cancel anytime “without fees or penalties.” Clearly, “anytime” is a stretch, and the extra month that people are typically charged is akin to an additional fee.
Initiating charges before the free trial ends, if true, would violate the click-to-cancel requirement to disclose all material terms before sign-up. And none of the terms of the offer are “clear” or “conspicuous,” as required by the rule. “Proof of consent” for sign-up is another feature of the rule; the fact that customers often didn’t know they signed up for Uber One suggests that this may have been violated.
The most important part of the click-to-cancel rule, of course, is that people can click to cancel. Based on the allegations, under no circumstances does Uber make it as easy to cancel as it is to sign up. The cancellation methods range between hard and impossible to find, depending on the time in the billing cycle, and either way are enormously burdensome.
In short, Uber is being sued over allegations that violate the rule that two Republican commissioners didn’t want to exist. The third Republican on the FTC, Mark Meador, recused himself from the case, and the two Democratic commissioners who had previously supported click-to-cancel, Alvaro Bedoya and Rebecca Kelly Slaughter, were illegally fired last month and are contesting that in the courts.
When the FTC finalized click-to-cancel last October, Holyoak issued a blistering 13-page dissent dismissing the rule, which came out before the 2024 election, as “blatant electioneering.” Holyoak repeatedly stated in the dissent that staff resources should be devoted to enforcement actions using “clear legal authorities” like the Restore Online Shoppers’ Confidence Act. But this lawsuit, while claiming violations under ROSCA, also used the FTC’s broader prohibition on unfair and deceptive acts and practices, including to claim that Uber illegally promoted how customers could cancel anytime without penalties or fees.
Perhaps existing prohibitions obviate the need for a new click-to-cancel rule; Khan’s FTC was able to bring a similar case against Amazon in 2023. But clear and well-publicized rules can galvanize the public.
A sampling of social media finds customers badgering companies like Spectrum and Instacart to get into compliance with click-to-cancel. One user claimed that Planet Fitness changed their policy to make cancellation easier, though the company’s FAQ page still suggests that subscribers must visit their gym in person or mail written notification to cancel, though it adds, “Some members may also be eligible to cancel their membership online.” Planet Fitness did not respond to a request for comment.
The alleged actions of companies like Uber suggest that nobody sees the current enforcement options of the FTC as a deterrent. A stronger public response to the click-to-cancel rule suggests that companies might.
In addition, violating a rule can trigger a civil penalty above the level of the ill-gotten gains. The Uber case, by contrast, only seeks monetary relief, equal to the losses caused by the alleged misconduct. And recent Supreme Court cases have made securing monetary relief in these types of cases difficult for the FTC, though not impossible.
In the absence of the rule, the FTC is left to engage in discretionary enforcement. A case against a high-profile company (and one whose chief legal officer is the brother-in-law of Donald Trump’s 2024 opponent) can attract headlines, but other possible violators may be able to hide in the weeds. Instead of labeling Uber’s alleged actions as broadly illegal and setting clear guidelines, the FTC would have to investigate case by case, and lose the benefit of public watchdogs. Of course, click-to-cancel will be in effect soon enough, if the new FTC chooses to employ it.
The FTC did not respond to a request for comment.
