Vonage Must Pay $100 Million To Settle ‘Junk Fee’ Allegations
On Thursday, internet-based telecom provider Vonage agreed to pay $100 million to the Federal Trade Commission to settle charges that it created an artificially onerous process to cancel the service that included hidden termination fees.
In its complaint, the FTC alleged that Vonage, a subsidiary of Ericsson, made it easy for consumers to sign up for its services, but much harder to cancel. Consumers could sign up for service in a variety of ways, including online and over the phone, but Vonage forced customers to talk to a live “retention agent” to cancel the service.
In addition, the FTC alleged that Vonage purposely hid the cancellation number on its website, limited the hours these cancellation calls were available, and failed to contact consumers who had left callback numbers.
“Vonage made it easy to sign up but much harder to cancel, sometimes leaving consumers stuck in an endless loop of transferring”
“Vonage made it easy to sign up but much harder to cancel, sometimes leaving consumers stuck in an endless loop of transferring,” FTC chairman Lina Khan said in a statement on Twitter Thursday. “In some cases, Vonage continued to charge customers, or hit them with hidden early termination fees.”
In a public statement Thursday, the FTC drafted the settlement as part of the agency’s commitment to combat the use of “dark cartridges,” a strategy many tech and telecom providers use to retain customers. Last year, the FTC has issued a policy statement promising to go after companies caught using the methods to trap consumers in subscription services.
Dark patterns and “junk fees” have been a focus of consumer complaints in recent years, especially with online ticketing services such as Ticketmaster. Earlier this week, more than 11,000 Taylor Swift fans came signed a petition calling on the Ministry of Justice to investigate Ticketmaster for consistently abusing its “market power to screw up concertgoers, sports fans, artists, venues and other ticket companies.”
After the FTC announced its Vonage settlement on Thursday, President Joe Biden said he has directed his administration to focus specifically on tariff structures that benefit consumers.
“I know that hidden clutter costs – such as concert ticket processing fees – are annoying. They are unfair, deceptive and add up,” Biden said on Twitter. “That’s why last week I called on my administration to take action against these fees and put that money back in your pocket.”
