The US Federal Trade Commission has initiated legal action against Uber Technologies, alleging that the company has engaged in practices harmful to consumers, specifically through its subscription service practices involving “deceptive billing and cancellation methods.”
In a complaint submitted on Monday, the FTC accuses Uber of charging users for its Uber One subscription without their explicit consent, misleading customers regarding potential savings, and creating overly complicated cancellation processes. The commission’s findings suggest that consumers may face up to 23 screens and need to complete 32 different steps to discontinue the service, according to a statement from the FTC.
Following the announcement, Uber’s stock prices fell sharply in New York, experiencing a decline of as much as 5.3 percent. By 2:15 p.m., shares were down 4.5 percent, trading at $71.84 (approximately Rs. 6,120).
In response to the allegations, Uber has rejected the FTC’s claims. A spokesperson for the company asserted that it does not enroll or charge customers without their consent and stated that the cancellation process typically takes no longer than 20 seconds for most users. “We are disappointed that the FTC chose to move forward with this action, but are confident that the courts will agree with what we already know: Uber One’s sign-up and cancellation processes are clear, simple, and adhere to legal standards,” the spokesperson said.
The decision to move forward with the lawsuit was made by a vote of 2-0 among the FTC’s three commissioners, with Mark Meador, the newest commissioner, abstaining. This action follows a report by Bloomberg News last year indicating that the regulator was investigating Uber’s subscription practices, particularly concerning enrollment and cancellation. Additionally, in the closing days of the Biden administration, the FTC launched an inquiry into whether Uber and its competitor Lyft Inc. unlawfully coordinated to restrict driver pay in New York City.
The FTC’s role includes enforcement of consumer protection laws against companies that mislead individuals regarding subscription terms. The agency has recently taken action against several other corporations, including Amazon.com Inc. and Adobe Inc., for allegedly complicating the cancellation process for their subscription services.
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