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Ericsson-owned Vonage forced to refund 100 million bucks

Legal gavel and smartphone

The US Federal Trade Commission has taken action against Vonage for making it too difficult for customers to cancel its VoIP services.

According to the FTC announcement, Vonage ‘used dark patterns to make it difficult for consumers to cancel and often continued to illegally charge them even after they spoke to an agent directly and requested cancellation.’ It doesn’t define these sinister-sounding dark patterns, but the court complaint says they are ‘a panoply of hurdles… which compound to deter and prevent customers from stopping recurring charges.’

Most people will be familiar with this sort of sharp practice, which certainly used to be commonplace in the telecoms industry but has been largely stamped out (in the UK at least) by the interventions of regulators. It’s the old trick of making it really hard to even find out how to cancel a contract and then adding as much hassle and stress to the process as possible in the hope that people will just give up in exasperation.

“Today the FTC delivers on our commitment to protect consumers from illegal dark pattern tactics by companies that prevent consumers from cancelling their services,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This record-breaking settlement should remind companies that they must make cancellation easy or face serious legal consequences.”

The settlement takes the form of a proposed court order that requires Vonage to pay back the suspiciously round number of $100 million to consumers harmed by its actions. That amount will be handed over to the FTC, which promises to definitely distribute it among all the punters it will somehow identify as being in need of compensation.

On top of that Vonage has to promise to be good from now on. Specifically it must undertake to:

  • 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.

It looks like Vonage started dabbling in the dark arts in 2017, when it decided to force customers to speak to a ‘retention agent’ (as opposed to cancellation agent) when they wanted to cancel one of its services. Some of those customers, it seems, were merely trying to prevent automatic billing following a free trial and, as covered above, some continued to be billed even after they had gone through the ordeal of one of these agents plead with them not to cancel.

This must be especially unwelcome for Ericsson, which is already in the bad books of US authorities for unrelated matters that nonetheless threatened the completion of the Vonage acquisition. We reached out to Ericsson for comment but had yet to hear back at time of writing. The company will presumably be hoping this settlement marks the end of this particular matter, since it took place before the acquisition.

 

UPDATE – 13:22, 4 November 2022: We received the following statement from a Vonage spokesperson.

“Vonage agreed to resolve this matter and is compliant with the requirements set forth in the settlement. The Company felt it was in the best interests of our customers, partners and employees to come to a settlement, so we can focus on creating technology solutions that help people and businesses communicate, connect and engage from anywhere. Vonage has a strong ethics and compliance culture built on integrity, and believes in operating in an open, honest and transparent manner. As always, customers are our number one priority. We remain focused on our customers and supporting their needs to connect people around the world and helping accelerate their digital transformation.”

 

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2 comments

  1. Avatar True 07/11/2022 @ 7:44 am

    Trust a an american company, full of marketing, is like to trust a terrorist!!

  2. Avatar Bernardo 07/11/2022 @ 11:36 am

    I wonder how much money does the FTC collect in fines, and how transparent is its process to distribute the money among the supposed “victims”. It would be so ironic if the FTC itself had a very opaque and convoluted process for the alleged claimants to request their share of the spoils.

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