Uber faces US FTC consumer protection investigation over subscriptions

By Leah Nylen 

The US Federal Trade Commission is looking into whether Uber Technologies Inc. violated consumer protection laws with its flagship subscription service.  

The FTC is investigating Uber over enrollment and cancellation aspects of the product, according to documents viewed by Bloomberg. The investigation was opened earlier this year.

 

The Uber One subscription programme gives discounts on rides and delivery orders in exchange for an annual fee. About 25 million people subscribe to Uber One, the company said in October.

 

Uber confirmed it has received inquiries about the programme from the FTC and said it’s cooperating with the agency’s review.  

 

“We will continue to answer any questions the FTC may have about our cancellation policies,” said Uber spokesperson Noah Edwardsen in an emailed statement. “The Uber One cancellation process follows both the letter and the spirit of the law: Uber One members can easily cancel their membership in the app — in fact, the majority of those cancellations take 20 seconds or less.” 

 

The FTC declined to comment.

 

Uber shares were little changed on Wednesday.

 

Subscription terms 

The FTC enforces consumer protection laws against companies that mislead consumers about subscription terms. The agency has recently sued several companies, including Amazon.com Inc. and Adobe Inc., for allegedly making it too difficult to cancel subscriptions. 

 

FTC consumer protection probes don’t always lead to enforcement actions. The agency often seeks monetary penalties in settlements because its ability to win fines in court is limited and was pared back further by a 2021 Supreme Court decision.

 

Earlier this year, the agency voted 3-2 to finalise a rule that would force businesses to make it easier for consumers to cancel, with both of the agency’s Republicans dissenting. The rule is now wrapped up in litigation after being challenged by business groups.

 

Enforcement agencies in the waning days of an administration often seek to wrap up probes, even as officials likely to remain with the incoming team push for delays.

 

Days after the Nov. 5 presidential election, the FTC sent a proposed complaint to Uber seeking to resolve the investigation via a settlement and asked for a response within a week. Uber made a counter proposal. 

 

The FTC’s settlement offer sought an “enormous monetary amount” for alleged violations of the law less than two months after the agency opened its probe, according to a letter Uber’s outside counsel sent to the agency’s five commissioners complaining about the rushed negotiations. 

 

Uber counteroffer 

Uber’s lawyers said its counteroffer was rejected by the staff. The attorneys criticised the agency’s staff for “attempting to cram through any case in record time” ahead of Donald Trump taking office in January.  

 

Republican FTC Commissioner Melissa Holyoak forwarded the letter in an email to FTC consumer protection staff, saying she found the allegations “highly concerning” and a potential “rush to judgment before the upcoming change in administration.” She requested the consumer protection staff provide an update on all cases it is seeking to resolve in the next two months.

 

Holyoak is under consideration to become the FTC’s chair once Trump takes office, along with her fellow Republican Commissioner Andrew Ferguson and a number of outside candidates, Bloomberg has reported. The president-elect has yet to name a new head for the agency.

 

Holyoak declined to comment.