FTC Secures Order Against Match for $14 Million Over Subscription

The FTC has recently announced that it has secured a $14 million order against Match Group on a variety of claims, including misleading users about guarantees and making it difficult for customer to cancel subscriptions.

While Match Group businesses are a unique class of dating app businesses, the facts of this case resulting in the $14 million order are still relevant for software and SaaS companies to consider.

The FTC’s complaint in this matter alleged the following:

• customers were deceptively induced to subscribe with the promise of a free six-month subscription “if they did not meet someone special” without adequately disclosing the onerous requirements they had to meet before the company would honor the guarantee;
• customer accounts were unfairly suspended if they successfully filed a billing dispute, and Match group kept their money without providing the paid-for services; and
• the Match Group made it difficult for users to cancel their subscriptions.

In addition to making the payment of $14 million to the FTC, the Match Group was required by the terms of the FTC Order to:

• clearly and conspicuously disclose that consumers registering for a “six-month guarantee” must, to the extent applicable, (a) secure and maintain a public profile with a primary photo approved by Defendants within the first seven days of purchase; (b) message five unique subscribers per month, and (c) use the progress page to redeem the free six months during the final week of the initial six-month subscription period;
• clearly and conspicuously disclose any material restrictions, limitations or conditions to purchase, receive, or use a “six-month guarantee” or any similar guarantee; and
• provide a simple mechanism for the customer to stop recurring charges from being placed on his/her credit card, debit card, bank account or other financial account.

In addition, the FTC Order “permanently restrained and enjoined [Match Group] from retaliating, threatening to take, or taking any adverse action against a customer who threatens to file or files a billing dispute with their financial institution or with any law enforcement or consumer protection agency by denying to such consumers access to and use of paid-for goods and services”.  The FTC, however, also stated that nothing was to preclude the Match group from suspending a customer’s service during a billing dispute; suspending or termination customer’s service if a refund has been issued; or keeping a customer’s account active but not visible to other users until the customer seeks to make the account visible again.

What lessons should software and SaaS companies learn from the Match enforcement action?

First and foremost, material terms for discounts, refunds, or free offers need to be clearly and conspicuously disclosed up front, before a customer’s payment information is collected.  Far too often, companies just list these types of terms on a billing schedule or web page without ever explaining in detail how the special offer will work, but that level of detail is not going to be sufficient to meet FTC requirements.

Secondly, recurring subscription charges need to be easy to cancel.

Finally, customers who dispute recurring subscription charges cannot be retaliated against.

Does your company work on a subscription model?  If yes, have you had your customer terms and/or agreements recently reviewed to confirm its compliance with FTC regulations, as well as new state regulations?  Schedule a consultation today with a software and technology attorney who has expertise in subscriptions at this link.