The Federal Trade Commission took action against Care.com last month for allegedly trapping customers in subscriptions and impeding cancellations.
Care, a platform for in-home child and elderly care services, agreed in a settlement to pay $8.5 million to consumers harmed by its practices, which allegedly included misleading caregivers about work opportunities. The company admitted no wrongdoing.
The Biden-Harris administration is taking to task companies that trap consumers in recurring subscriptions or make it nearly impossible to cancel services. Care is one of the latest companies to come under federal crosshairs.
The federal initiative, dubbed the “Time Is Money” campaign, launched just 10 days prior to the Care settlement and tasks federal agencies with cracking down on companies that provide purposefully poor customer service in an effort to maximize profits. Efforts includes cracking down on customer service “doom loops” and regulating chatbot usage.
To experts like Erin Witte, director of consumer protection at Consumer Federation of America, an association of nonprofit consumer organizations, the action against Care should put other companies on notice.
“The signal to other companies is that they should shift their business models to reflect actual consumer consent to continue a subscription,” Witte said in an email. Consumers shouldn’t have to spend time navigating drawn-out cancellation processes, she said.
But the “Time Is Money” initiative and the federal agencies implementing it are working under a ticking clock with the presidential election fast approaching. The initiative could be at risk depending on which candidate enters the White House, analysts told CX Dive.
“What I can say is if Vice President Harris wins in the fall, I would expect that the FTC will be allowed to continue on its mandate of trying to protect consumers,” said Judy Weader, a principal analyst at Forrester.
“Now, if we have a second Trump administration, then I think things are going to be different because he's already done a lot of signaling about a super pro-business stance, which is very on brand for him. He was like that in his first term, and I would expect that the FTC would get reined in significantly,” she said.
Among those efforts with an uncertain future is the FTC’s proposed rule to make it as easy to cancel a membership as it is to sign up for one.
Witte says protecting consumers from corporate abuse should not be a partisan issue.
"The FTC’s crackdown on dark patterns used to trap people in subscriptions they don’t want anymore has really resonated with the public,” Witte said.
How deceptive practices impact CX
No matter the direction the FTC takes, companies would do well to reconsider any deceptive practices around canceling services or language to mislead customers, Weader said.
“When you frustrate or you confuse your customers, you tend to give them the sense that, even when you think you're doing something in their best interest, you're actually not. You're doing it for your own best interest,” Weader said.
The use of legal jargon to hide specifics of a customer’s agreement with a company can also harm that customer-business relationship.
“Once you start throwing in a little bit of Latin and you throw in all the other legalese, you may be protecting yourself, but what you're actually doing is you are creating a barrier for your customers to understand what they're buying, and worse still, you're creating a barrier to trust,” Weader said.
In the case of Care, tens of thousands of consumers complained about its cancellation process, according to the FTC’s complaint.
“When seekers and providers attempt to cancel their auto-renewing memberships, Care frustrates their ability to do so,” the complaint reads. “Many are unable to determine how to begin the cancellation process to stop recurring charges. Consumers who manage to locate the inconspicuous cancellation flow must then navigate a multipage process rife with deceptive design tactics, known as dark patterns, that limit the number of people who successfully cancel.”
Care, for its part, took issue with the FTC’s assessment.
“This settlement is in no way a validation of the FTC’s claims,” Care said in a statement.
“Families and caregivers can and do cancel memberships at any time and for a variety of reasons, including having successfully found a caregiver or a job. Our members can easily cancel if they wish, and we have further streamlined the process for doing so.”
Under the settlement, Care agreed to provide users with a simple cancellation method, “at least as easy to use as the method the consumer used to initiate.” Cancellations must also be available on the same platforms on which customers could initiate the subscription.
Making cancellations easy can build trust, Weader said. But making it difficult to navigate a business’ services is a surefire way to kill positive engagement and advocacy.
“Your customers don't go into relationships with you wanting to mistrust you,” Weader said. “But when you put complicated words and processes in between them and the things they're trying to accomplish, then you are sowing the seeds of distrust. And that's not a great situation, and it doesn't feed into long term loyalty and engagement and advocacy.”
