Chegg pays $7.5 million to settle FTC claims its services were hard to cancel

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By Jody Godoy

(Reuters) – Chegg Inc has agreed to pay $7.5 million to settle U.S. Federal Trade Commission claims that the educational technology company made it difficult to cancel subscriptions, according to court papers filed in San Jose, California, on Monday.

Chegg buried cancellation options behind multiple menus on its website, according to the FTC complaint, which joins a number of recent FTC actions against companies over onerous cancellation methods.

Chegg knew the process was difficult and confusing, the FTC said, citing internal emails including a 2021 email from Nathan Schultz, who is now Chegg’s chief executive, saying there “should be some pain involved” in cancellation, referring to a requirement that customers complete a survey before they could cancel. 

A Chegg spokesperson said the company disagrees with the FTC’s claims but settled to avoid prolonged litigation.

Christopher Mufarrige, who leads the FTC’s consumer protection bureau, said the case is part of an FTC effort to reinvigorate the agency’s anti-fraud enforcement.

A court this year blocked a Biden-era FTC rule that would require companies to make it as easy to cancel services as it is to sign up. The FTC under Trump has used existing authority, such as the 2010 Restore Online Shoppers’ Confidence Act, to sue individual companies it says use overly burdensome cancellation methods.

The FTC sued Uber Technologies in April alleging it deceptively marketed its Uber One subscription, and sued the operators of gym chain LA Fitness in August for burdensome membership cancellation requirements. The agency is also gearing up for trial next week in a case accusing Amazon.com of enrolling users in Prime without their knowledge and making it difficult to cancel the service. The companies are contesting the allegations.

(Reporting by Jody Godoy in New York; Editing by Mark Porter and Lisa Shumaker)