Leading the way, the Federal Trade Commission (FTC) has made a splash by suing Uber Technologies Inc. They accuse the ride-hail and delivery behemoth of taking payments from consumers for its Uber One subscription program without obtaining their approval. According to the lawsuit, Uber illegally charged users who signed up for a free trial. This happened several months before those users even had a chance to go through that trial period.
Uber One not only offers customers savings, but it guarantees them $25 in savings every month. As it approaches its 2024 anniversary, the platform has gained over 30 million members in 34 countries. The FTC’s investigation into Uber began last year and highlights concerns regarding the subscription service’s cancellation process, with the agency claiming that it was “extremely difficult” for customers to terminate their subscriptions. The complaint further shows that users were left with the frustrating experience of having to click through 23 separate screens. They needed to go through up to 32 steps just to unsubscribe.
Uber has vigorously disputed the claims as well. The company is not transparent when it touts that its sign up/cancellation processes are straightforward and legally compliant. Just two weeks ago, the company trumpeted giving users the ability to cancel subscriptions right in the app. This easy action is only 2-3 clicks and less than 20 seconds long!
Many of these users said they were directed to reach out to customer service for help with cancellations, but were given no real way to do that. Other customers were charged additional fees for subsequent billing periods after requisitioning a cancellation. They were stuck in purgatory, hanging on customer support tickets.
“Some users are told they have to contact customer support to cancel but are given no way to contact them; others claim that Uber charged them for another billing cycle after they requested cancellation and were waiting to hear back from customer support,” – FTC’s statement
The FTC’s complaint alleges that Uber didn’t come close to providing the promised savings connected to the subscription service. The agency noted that consumers likely benefitted from saving money. Uber forgot to factor in the subscription price tag of up to $9.99 monthly while advertising those savings.
In response to these allegations, Uber spokespersons said they were disappointed with the FTC’s decision to litigate. They held on to hope that the court would affirm their stance that their subscription practices were clear, legal and above board.
“We are disappointed that the FTC chose to move forward with this action, but are confident that the courts will agree with what we already know: Uber One’s sign-up and cancellation processes are clear, simple, and follow the letter and spirit of the law,” – Uber spokesperson
In October, FTC Chairman Andrew Ferguson warned against abusive subscription practices. Notably, he noted that consumers are being more and more frustrated with subscriptions they don’t want and can’t easily get out of.
“Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel,” – FTC Chairman Andrew Ferguson
The FTC’s lawsuit follows closely behind new regulations to make it easier for consumers to cancel subscriptions. The agency finalized its “click to cancel” rule in October 2024, mandating that companies make it as easy to cancel a subscription as it is to sign up for one.
In fact, Uber CEO Dara Khosrowshahi has already predicted that membership fees from Uber One will reach over $1 billion by 2024. It has not reported an annual profit yet, but witness the company’s strong and consistent growth of late, which includes an expected 60% annual growth in its subscriber base.
If successful, this lawsuit could have serious implications for Uber’s business model. Additionally, it could change the way the company tries to obtain customers’ consent for its tabbed subscription offerings. Looking out the windshield Regulatory scrutiny is increasing. We’ll now be watching closely to see how companies like Uber change their practices to comply with new and emerging consumer protection standards.
Leave a Reply