The FTC is not wasting any time this year—here’s a new case about subscription offers. The agency sued personal finance app FloatMe and its co-founders today. FloatMe allegedly charged users without consent and used “dark patterns designed to thwart … attempts to cancel.”
The FTC says FloatMe’s cofounders knew FloatMe was “double or triple” charging consumers the subscription fees, due to “pushing out to members without fixing shit,” but let the issue linger for years.
And this part is important for any consumer-facing brand offering subscriptions—the FTC scrutinized FloatMe’s cancellation procedures. Remember, the Restore Online Shoppers’ Confidence Act (ROSCA) requires that consumers must be provided a “simple” mechanism to cancel. The FTC has emphasized that “simple” should mean that it’s as easy to cancel an online subscription as it is to enroll in it.
Back to FloatMe: The FTC says FloatMe’s cofounder admitted that they intentionally designed the cancellation process to be difficult:
FloatMe allegedly racked up customer complaints about its “faulty” cancellation procedures, including non-functional “cancel” buttons and other sources of “friction.”
And when customers did manage to request cancellations, “FloatMe often fails to honor the cancellation requests,” according to the Complaint.
Recall also that ROSCA requires clear and conspicuous disclosure of ALL material terms of a transaction that includes a negative option (i.e., subscription) offer. Here, like in the FTC’s case against MoviePass, the agency alleges that FloatMe violated ROSCA by failing to disclose material terms of the offer—including material terms that were not related to the subscription component:
And here are the other counts related to ROSCA:
The FTC isn’t the only one suing about noncompliant subscription practices. This continues to be a hot area for consumer class action litigation, too. Start the year off right by taking a close look at your auto-renewal offers to see if you’re taking on risks you don’t want.