The Federal Trade Commission (FTC) is examining the possibility that Uber engaged in consumer protection law violations, as it automatically signed customers into its Uber One subscription service, making it cumbersome for them to opt-out.
The investigation began several months ago, following numerous customer complaints. The accusations against the ride-sharing behemoth could have far-reaching repercussions, given the increased focus on its subscription model.
Probe Launched Following Consumer Grievances
The FTC has since launched an investigation into complaints from customers who claim to have been automatically signed into the Uber One service against their will. Moreover, according to TechCrunch, others complained that canceling the same service was complicated, something that frustrated them.
It is in this regard that the report now says that the FTC is examining how Uber's practices might have violated consumer protection laws governing transparency and fairness in such subscription services.
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Uber's Defense: 'Cancellation Process is Easy'
Uber has responded to the FTC investigation with a defense of its subscription service practices.
According to Bloomberg News, the company said that its cancellation process is easy and quick. It said that it takes less than 20 seconds to cancel an Uber One subscription.
Uber asserts that its practices fulfill both the letter and spirit of the law, adding that consumers can cancel their subscriptions easily at any time if they want to.
Based on this, the FTC probe appears to question whether Uber can rely on self-regulation alone to ensure consumer welfare.
FTC's 'Click-to-Cancel' Rule
The probe launched by the FTC against Uber is part of a continued FTC crackdown on subscription service operators. Within recent months, the FTC has been rather keen on how to simplify the process for consumers when canceling subscriptions they don't need anymore.
In October, the commission proposed a new rule called "click-to-cancel," whereby companies should enable customers to cancel a subscription with the ease of a single click. That rule could be applied in many services: from online streaming to memberships at a gym.
While the click-to-cancel rule has been finalized, it already has legal challenges. The companies, which include Uber, may be affected by the rule if it remains. This is because the FTC is interested in ensuring that subscription services are consumer-friendly.
The actions by the agency might make businesses more open and transparent while providing cancellation procedures, which give consumers a lot of control over their subscriptions.
Failed Settlements with Uber
The FTC investigation into Uber is not the first case in which the agency has looked to settle issues with the business practices of the company.
According to reports, at the time of the Donald Trump presidential election transition, the FTC attempted to negotiate a settlement with Uber. However, Uber's lawyers are reported to have described the terms of the proposed settlement as involving a substantial monetary amount.
Apparently, the negotiations hit a dead end, and the investigation into Uber's subscription practices continues.
What's at Stake for Uber?
If the FTC discovers that Uber has committed violations of consumer protection, it may face severe consequences, including legal and monetary damages.
The ride-sharing firm may be compelled to completely restructure its subscription scheme, introduce more transparent methods of cancellation, and maybe pay fines.
The consequence of this investigation will shape other companies offering subscription services and remind them of how much consumer rights and transparency are valued.
Uber is the ultimate example of how subscription land is changing. More strict regulations are likely to raise consumer expectations and necessitate changes in business practices toward alignment with the growing expectations of consumers and the legal needs of companies.
