Photo agency Shutterstock will pay $35 million to settle the US Federal Trade Commission (FTC) allegations that the agency illegally made tens of millions of dollars from a range of unfair and deceptive practices, including charging consumers for products without their informed consent and making it difficult to cancel subscriptions.
About the FTC: ‘The FTC’s mission is to vigorously enforce the law to protect Americans from anticompetitive, unfair, and deceptive business practices, without unduly burdening legitimate business activity.’
Here’s the detail of what the FTC’s complaint charged Shutterstock with:
• Failing to clearly and conspicuously disclose material terms before billing. Shutterstock failed to disclose the renewal terms, what cancellation fees applied and when, and the amount of the fees.
• Failing to obtain consumers’ express informed consent. Shutterstock failed to get consent to charge consumers’ credit cards before charging them for subscriptions and content packs.
• Failing to provide simple cancellation mechanisms. Shutterstock has failed to provide simple means for consumers to cancel their subscriptions. For example, before 2024, consumers could not complete early cancellation online and were required to contact customer support by phone, chat, or email, all of which were a complicated and time-consuming process.
FTC say: “Subscription and negative option features can be beneficial for both companies and consumers, making renewal simpler and streamlining payment processes,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “But these benefits depend critically on firms clearly disclosing material terms, securing express and informed consent before charging consumers, and ensuring cancellation is a straightforward and simple process. When firms fail to follow these simple principles, they deprive consumers of the ability to make informed choices, undermining consumer sovereignty and impeding competition. The Commission’s action today underscores its commitment to preserving consumer choice and facilitating competition in digital markets and subscriptions.”
The settlement on May 13th concluded Shutterstock will pay $35 million, which will be used to provide full relief to the consumers harmed by Shutterstock’s illegal billing and cancellation practices. The proposed order also prohibits Shutterstock from misrepresenting material terms of its subscription offerings and requires it to disclose material terms of its subscription offerings, obtain consumers’ express informed consent to charges and maintain simple cancellation mechanisms for negative option features.