Chegg Inc. has agreed to pay $7.5 million to settle allegations by the Federal Trade Commission (FTC) that the company made it difficult for consumers to cancel recurring subscriptions and did not honor cancellation requests.
According to the FTC, Chegg failed for years to provide a straightforward way for students and parents to cancel auto-renewing subscriptions for its online learning tools, including homework help and writing assistance services. The settlement requires Chegg not only to pay the monetary amount but also to implement a simple cancellation process for consumers.
“It harms the American people when companies fail to provide simple mechanisms to cancel recurring charges as Congress required in the Restore Online Shoppers’ Confidence Act,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “As part of our effort to reinvigorate the agency’s fraud program, the FTC will continue enforcing ROSCA against online sellers where they violate this important statute.”
The complaint filed by the FTC states that Chegg continued charging some users even after they had attempted to cancel their subscriptions. Since October 2020, nearly 200,000 consumers were charged after requesting cancellation. The agency also found that Chegg’s website buried its cancellation processes behind multiple clicks and required users to navigate a confusing system. Despite receiving substantial consumer feedback about these difficulties and internal acknowledgment of these issues, Chegg did not make its cancellation link more visible.
The FTC alleges that these practices violated both Section 5 of the FTC Act and requirements under the Restore Online Shoppers’ Confidence Act (ROSCA), which obligates online retailers using negative option features—such as automatic renewals—to clearly disclose terms, obtain informed consent before charging customers, and offer easy ways for consumers to stop recurring payments.
This action follows a previous settlement between Chegg and the FTC in 2022 related to data security concerns. That earlier order required Chegg to strengthen its data protection measures after allegations that weak security practices exposed sensitive information belonging to millions of customers and employees.
Under this latest proposed order, funds from Chegg’s payment will be used for refunds for affected consumers. The company is also mandated by court order—if approved—to maintain accessible cancellation options going forward.
The complaint and proposed order were filed in U.S. District Court for the Northern District of California following authorization by an undisclosed Commission vote count.
The Federal Trade Commission continues its mission promoting competition while protecting and educating consumers through resources such as consumer.ftc.gov and ReportFraud.ftc.gov.
