Last week, a federal judge in the Northern District of California ruled on Uber’s motion to dismiss a case brought by the Federal Trade Commission (FTC) alleging deceptive practices in connection with its Uber One subscription program. The complaint alleged violations of the Restore Online Shoppers’ Confidence Act (ROSCA) and deceptive advertising and marketing misrepresentations in violation of Section 5(a) of the FTC Act and numerous state laws.
Link to FTC Uber Lawsuit and ROSCA Claims FTC Uber Lawsuit and ROSCA Claims
The court granted in part and denied in part the motion to dismiss. The court granted the motion to dismiss as to only two discrete aspects of the complaint. First, it dismissed the FTC’s subclaim challenging Uber’s “$0 delivery fee” representation, holding that the statement was not misleading as a matter of law because it was expressly limited to “eligible” orders and therefore would not lead a reasonable consumer to believe all orders qualified.
Second, the court found that the complaint improperly grouped numerous state statutes without identifying their elements or distinguishing among them. The court granted leave to amend within 21 days solely to cure those deficiencies, instructing that each state law claim must be pleaded as a separate count and tied to the specific statute at issue.
Link to Subscription Disclosures and Billing Practices Scrutinized Subscription Disclosures and Billing Practices Scrutinized
The court otherwise allowed the ROSCA claims to proceed, including the allegation that Uber failed to clearly and conspicuously disclose material terms prior to obtaining consumers’ billing information. Although Uber argued that disclosures were provided during the enrollment flow, the FTC contended that those disclosures were presented in smaller, less prominent font and in context—such as pop-ups, push notifications, and prompts presented while consumers attempted to book a ride or place a delivery—where consumers would not reasonably expect to be enrolling in a subscription.
The court declined to determine at the motion to dismiss stage whether Uber’s disclosures were clear and conspicuous, finding that the issue cannot be—and is rarely—resolved as a matter of law based solely on the pleadings and alleged user experience.
Separately, the court held that the FTC sufficiently alleged that the timing of Uber’s disclosures violated ROSCA because they were presented only after consumers’ billing information had already been obtained. Specifically, consumers enrolled in Uber One after providing their billing information to use Uber for an unrelated single ride or delivery transaction.
Uber then presented consumers with Uber One’s subscription terms on the same screen, indicating that it would charge the consumer’s preexisting payment method, requiring consumers to take an affirmative step to change that method rather than affirmatively opting in.
The court noted that this result might have been different if consumers had been given the option to autofill their existing payment information or affirmatively opt in to its use after receiving the disclosures but concluded that the FTC’s description of Uber’s practices plausibly alleged a violation of ROSCA’s requirement that all material terms must be disclosed before obtaining consumers’ billing information.
Link to Cancellation Requirements Under ROSCA Challenged Cancellation Requirements Under ROSCA Challenged
Finally, the court denied Uber’s motion to dismiss the FTC’s claim that Uber failed to provide a “simple” cancellation mechanism as required under ROSCA. The FTC alleges that for consumers seeking to cancel their subscriptions within 48 hours of their next billing date to avoid renewal charges, consumers are subject to a more burdensome cancellation process that is not adequately disclosed.
Although Uber argued that users are instructed to cancel “in the app,” the court found that this direction may be insufficient to explain to consumers how to cancel and potentially inaccurate, given allegations that the cancellation mechanism as well as the cancellation button itself are difficult to locate within the app, and that consumers attempting to cancel within the 48-hour window cannot actually do so within the app because they must contact customer support to complete the cancellation. The court declined to conclude at this stage that, as a matter of law, Uber’s cancellation process was “simple” based on the allegations in the complaint.
The court’s analysis was necessarily constrained at this motion to dismiss stage, as the court was required to accept the FTC’s well-pleaded allegations as true. As a result, the decision does not resolve the ultimate merits of the FTC’s claims but instead allows the case to proceed to further factual development. Our team will closely monitor this case and assess its implications for companies operating autorenewal programs. Contact Venable’s Autorenewal Solutions Team (VAST) if you have questions about the case or your subscription practices.
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