The Federal Trade Commission (FTC) is sending out almost $100MN in refunds to Vonage consumers after denouncing the vendor for “junk fees” and “illegal dark patterns” in November 2022.
Those dark patterns include actions that made it difficult for consumers to cancel their subscriptions.
Moreover, the FTC found that Vonage continued to charge customers illegally after they spoke to a service agent directly requesting a cancellation.
In other cases, agents told customers they must pay an unexpected termination fee – which Vonage didn’t clearly disclose in the onboarding process.
Often, that fee would cost hundreds of dollars.
After the investigation, Vonage reached a settlement with the government agency to pay up, and – one year later – those refund payments will reach the 389,106 affected consumers.
Now, Vonage must also ensure its cancellation process is “simple and transparent” and “stop charging consumers without their consent”.
Speaking after the initial ruling, Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, added:
[The action] delivers on our commitment to protect consumers from illegal dark pattern tactics by companies that prevent consumers from canceling their services.
“This record-breaking settlement should remind companies that they must make cancelation easy or face serious legal consequences.”
Importantly, this only relates to Vonage’s consumer business – not its B2B dealings.
Indeed, the actions target consumer accounts, valued from $5 to around $50 each month.
However, the FTC also suggested that the issue at Vonage stretched further, noting that the vendor left “consumers and businesses on the hook for services they no longer want.”
Such practices are becoming an increasing concern across the CX industry, with reports elsewhere of other issues like vendor lock-ins and arbitrary fee increases.
The topic became a central focus of a CX Today panel discussion about decelerating CCaaS growth.
During that conversation, analysts warned that such moves are detrimental to long-term success and – most crucially – deeply concerning in an industry that champions customer-first business principles.
After all, brands that offer customer experience technologies must lead by example.
Hopefully, Vonage – and more market rivals – will steer clear of such practices within their B2B and broader businesses.
Yet, unfortunately, this has not proved an isolated incident at Vonage. Indeed, the vendor recently came under the wrath of The Australian Communications and Media Authority (ACMA) for a compliance breach.
In this case, it – alongside Twilio – broke SMS anti-scam regulations. Vonage did so by allowing customers to send SMS messages that included sender IDs (i.e., shortened business names) without adequate checks that users weren’t harnessing the tech to execute scams.
As a result, the Australian government agency found that the vendor enabled fraudsters to send 3,387 scam texts impersonating high-profile organizations. These included ApplePay, Commonwealth Bank, and Australia Post.
That news followed Ericsson – the vendor’s parent company– announcing a Vonage impairment charge of $2.92BN.
While there are positives for Vonage elsewhere – especially in its CPaaS Magic Quadrant performance and Ericsson’s new API platform – such news stories may prove tricky to shake.
CX Today has contacted a PR team representing Vonage for a comment on the FTC news. We haven’t yet received a response.
