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Investing.com -- Education technology provider Chegg Inc. will pay $7.5 million to settle Federal Trade Commission allegations that it made canceling recurring subscriptions unnecessarily difficult for consumers.
The FTC complaint alleges that Chegg failed to provide students and parents with simple mechanisms to cancel auto-renewing subscriptions for online learning tools, including homework help and writing assistance services.
According to the complaint, Chegg continued charging nearly 200,000 consumers since October 2020 even after they had requested cancellation. The company’s online cancellation processes were reportedly buried on its websites, requiring multiple clicks to locate, and presented users with a confusing and cumbersome process.
"It harms the American people when companies fail to provide simple mechanisms to cancel recurring charges as Congress required in the Restore Online Shoppers’ Confidence Act," said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection.
The FTC alleges that Chegg’s practices violated both the FTC Act and the Restore Online Shoppers’ Confidence Act, which requires online retailers using negative option features to clearly disclose material terms, obtain informed consent before charging, and provide simple cancellation methods.
Under the proposed settlement filed in the U.S. District Court for the Northern District of California, Chegg must maintain simple cancellation mechanisms for negative option features. The $7.5 million payment will be used to provide refunds to affected consumers.
This marks the second FTC settlement for Chegg in recent years, following a 2022 order that required the company to strengthen its data security practices after exposing sensitive information about millions of customers and employees.
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