Vonage to pay $100m for making it nearly impossible to cancel internet phone services

Ericsson's VoIP biz used 'a panoply of hurdles' to keep customers on the hook

Vonage has agreed to cough up $100 million to customers for making it nearly impossible to cancel their internet phone service, according to a proposed court order.

The Ericsson subsidiary, which provides Voice over Internet Protocol (VoIP) to folks and small businesses, automatically bills customers for these services every month, according to a US Federal Trade Commission complaint. These bills range from $5 to $50 for consumers, and businesses pay upwards of thousands of dollars each month.

While the telecoms giant makes it really easy to sign up for their phone services — consumers can enroll online, on their own, without any agent assistance — Vonage, since at least 2015, "failed to provide a simple method for customers to cancel their telephone services," the American consumer watchdog agency claimed [PDF].

The VoIP biz used "a panoply of hurdles, sometimes referred to as dark patterns, to keep customers on the hook and prevent them from stopping the monthly charges, the FTC alleged. 

For example, Vongage requires customers that want to cancel their phone bill to speak to a live "retention" agent during limited hours and "obscured contact information" to reach an operator, the FTC said. While on the phone with a Vonage agent, customers "faced redundant procedural requirements, long wait times, dropped or unanswered calls, lengthy and repeated sales pitches, and unexpected high-dollar early termination fees," according to the complaint.

Even if customers do manage to jump over all of these hurdles and cancel their accounts, "in many instances, Vonage has continued to charge them without consent," it said.

Vonage, for its part, has agreed to settle the court order [PDF] that will require it to pay $100 million to refund customers, and take a number of steps to make it easier for individuals and businesses to cancel their phone services. 

These include providing a simple cancellation process that is easy to find and use, and being upfront about subscription plans and "negative options" — this happens when a customer agrees upfront to certain services, the provider then starts adding new ones, and treats the consumer's failure to reject the services or cancel the agreement as consent to be charged.

Vonage must also have express, informed consent before it can charge customers and must stop using dark patterns on its website. 

"This record-breaking settlement should remind companies that they must make cancellation easy or face serious legal consequences," Samuel Levine, director of the FTC's Bureau of Consumer Protection said in a statement.

To put the $100 million settlement in perspective: Vonage's 2021 revenue topped $1.4 billion.

The SEC enforcement makes Vonage the latest big tech firm to come under fire by regulators and the courts for using dark patterns. 

Last month Google agreed to pay $85 million to settle a privacy lawsuit that accused the internet behemoth of using "dark patterns" in its user interfaces – deceptive controls and layout of settings – to fool people into providing their real-time whereabouts to the mega-corp for targeted advertising purposes.

Additionally, the FTC recently began its rule-making process to impose stricter privacy rules on corporations, and during a recent public hearing, dark patterns frequently came up as one area that's ripe for regulation. ®

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