Tech Industry Archives - Page 2 of 2

"Click to subscribe, call to cancel" is a highly effective (at least in the short-term) and universally irritating way for businesses to retain customers. Some states such as California, New York, and Maine have already outlawed the practice. However, the situation at the national level is ambiguous. "Click to subscribe, call to cancel" is a just one example of how some companies intentionally make it confusing and inconvenient for consumers to cancel their subscriptions. Currently, there's no explicit federal law that says companies have to make it easy for people to cancel subscriptions. However, the Federal Trade Commission Act does ban "unfair and deceptive trade practices". And two days ago, the FTC filed a lawsuit against Amazon for allowing people to enroll in Prime with one or two clicks but requiring them to navigate a "four-page, six-click, fifteen-option" process to cancel. The specific legal accusation was that Amazon's cancellation policy was a deceptive trade practice because it intentionally misled consumers into making decisions they otherwise would not have made. In making this argument, the FTC heavily relies on academic research from people like Harry Brignull who have published articles on how certain features of an app's design can mislead people into making decisions they later regret. Researchers have dubbed these misleading features "dark patterns". But is an inconvenient or confusing user experience enough to constitute a deceptive trade practice in the eyes of the law? A small business may have a confusing cancellation process simply because it doesn't have a lot of money and what money it does have is put towards improving the sign up process rather than the cancellation process. A startup may require an exit survey so that they can figure out why you cancelled so that they can improve their product for the next customer--that's good for innovation. And there's also a big issue of perspective. Every attempt to sell someone is an attempt to get them to do something they would not otherwise have done. If I'm an ethical salesperson, I'll only try to sell things to people that I believe will make them better off. If I'm an ethical founder of a company that I truly believe will help people, I may want to show someone a screen highlighting the things they'll lose by unsubscribing before I process the cancellation. That isn't deceptive under the common language definition of the term, but it could be under the FTC's definition. Whether or not the FTC wins will ultimately come down to whether or not it can prove Amazon's cancellation process met either the deceptive trade practice or unfair trade practice standard. Deceptive Trade Practice Standard An act or practice is deceptive where: A representation, omission, or practice misleads or is likely to mislead the consumer, A consumer's interpretation of the representation, omission, or practice is considered reasonable under the circumstances, and The misleading representation, omission, or practice is material Unfair Trade Practice Standard An act or practice is unfair where it: Causes or is likely to cause substantial injury to consumers, Cannot be reasonably avoided by consumers, and Is not outweighed by countervailing benefits to consumers or to competition. In 2022, the phone service company Vonage paid $100 million to settle a similar lawsuit with the FTC. Given that Vonage only made $1.3 billion of revenue in 2022, that $100 million settlement was a big deal which means the company must have believed there was a serious possibility of the FTC winning the case. That doesn't bode well for Amazon. References [1] FTC press release: FTC takes action against Amazon for enrolling consumers in Amazon Prime without consent and sabotaging their attempts to cancel [2] Court Filing: FTC's initial complaint against Amazon [3] FTC Act section 5(a) [15 U.S.C. 45(a)] [4] Restore Online Shoppers' Confidence Act (ROSCA) section 4 [15 U.S.C. 8403] [5] 16 CFR part 310 -- Telemarketing Sales Rule [6] FTC Act section 5 consequences for banks [7] WSJ: Vonage will pay $100 million to settle FTC allegations of trapping customers in subscriptions (2022) [8] WSJ: Subscription companies rethink irksome cancellation policies (2021) [9] FTC press release: Federal Trade Commission proposes rule provision making it easier for consumers to "click to cancel" recurring subscriptions and memberships What is a "negative option feature"? In the context of online businesses, a negative option feature means a provision of an offer which interprets a customer's silence (or failure to take an affirmative action to reject goods or services, or to cancel the agreement) as acceptance of the offer.

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Category: Tech Industry