Shutterstock has agreed to pay US$35 million to settle charges brought by the U.S. Federal Trade Commission (FTC) over its subscription plans and cancellation practices. The FTC alleged that the stock image company misled customers about the terms of its subscription plans and made it unreasonably difficult for them to cancel their memberships.
Allegations of Deceptive Practices
The FTC's complaint, filed in federal court, accused Shutterstock of violating the Restore Online Shoppers' Confidence Act (ROSCA) by failing to clearly disclose the terms of its subscription plans and by using "dark patterns" to impede cancellations. According to the FTC, Shutterstock offered free trials and discounted subscriptions but did not adequately inform customers that they would be automatically enrolled in recurring payments at higher rates if they did not cancel before the trial or discount period ended.
Difficulty in Cancelling
Customers who attempted to cancel their subscriptions faced a cumbersome process, the FTC said. The agency alleged that Shutterstock required customers to navigate through multiple pages, answer questions, and confirm their cancellation multiple times, all while being presented with offers to keep their subscription. In some cases, customers reported that their cancellation requests were not processed, leading to continued charges.
Settlement Terms
Under the settlement, Shutterstock will pay $35 million, which the FTC will use to provide refunds to affected consumers. The company is also required to make changes to its subscription and cancellation practices. Specifically, Shutterstock must obtain express informed consent from customers before charging them for a subscription and must provide a simple mechanism for customers to cancel their subscriptions online.
Shutterstock's Response
In a statement, Shutterstock said it disagreed with the FTC's allegations but chose to settle to avoid the cost and distraction of litigation. The company noted that it had already implemented many of the required changes prior to the settlement and is committed to providing a transparent and user-friendly experience for its customers.
Broader Implications
The settlement is part of a broader FTC crackdown on subscription-based companies that use deceptive practices. The agency has recently taken action against several companies for similar violations, emphasizing the importance of clear disclosures and easy cancellation processes. Consumers who believe they were improperly charged by Shutterstock may be eligible for refunds through the FTC's refund program.
