Vonage will pay $100 million not to let VoIP users go

Vonage will pay $100 million not to let VoIP users go

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Vonage has agreed to pay customers $100 million 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 homes and small businesses, automatically bills customers for these services each month, according to a complaint from the US Federal Trade Commission. These bills range from $5 to $50 for consumers, and businesses pay over thousands of dollars each month.

While the telecommunications giant is making it easier to sign up for its phone services – consumers can sign up online, on their own, without the help of an agent – Vonage, since at least 2015, “hasn’t succeeded in providing an easy method for customers to cancel their phone services,” the US consumer watchdog said. [PDF].

The VoIP industry has used “an array of hurdles, sometimes called dark schemes, to keep customers hooked and prevent them from stopping monthly charges, the FTC alleged.

For example, Vongage requires customers who want to cancel their phone bill to speak with a live “retention” agent for limited hours and “contact information withheld” to contact a carrier, the FTC said. 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 termination fees. anticipated high and unexpected,” according to the complaint.

Even if customers manage to get past all those hurdles and cancel their accounts, “in many cases, Vonage continued to bill them without consent,” he said.

Vonage, for its part, agreed to settle the court order [PDF] it will require it to pay $100 million to reimburse 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’s easy to find and use, and being upfront about subscription plans and “negative options” – this happens when a customer agrees to advances certain services, the provider then begins to add new ones and treats the consumer’s failure to refuse the services or cancel the agreement as consent to be billed.

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 businesses that they must make it easier to rescind or face serious legal consequences,” Samuel Levine, director of the FTC’s Consumer Protection Bureau, said in a statement.

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

The SEC’s application makes Vonage the latest big tech company to be criticized by regulators and courts for using dark models.

Last month, Google agreed to pay $85 million to settle a privacy lawsuit that accused the internet giant of using “dark patterns” in its user interfaces – misleading controls and settings layout – to deceive people into providing their real-time location to mega-corp for targeted advertising purposes.

Additionally, the FTC recently began its rule-making process to impose stricter privacy rules on companies, and in a recent public hearing, dark patterns often emerged as an area ripe for regulation. ®

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