New England Biz Law Update
The Federal Trade Commission (FTC) has ordered Care.com to pay $8.5 million to settle allegations of deceptive practices. Care.com, an online “gig work” platform connecting families with childcare and senior care providers, has been accused of misleading both caregivers and care seekers about job availability, potential earnings, and subscription cancellation processes.
According to Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, “Care.com used inflated job numbers and baseless earnings claims to lure caregivers onto its platform, and used deceptive design practices to trap consumers in subscriptions.”
The FTC’s complaint against Care.com included several allegations:
- Misleading earnings claims: Care.com allegedly made unsubstantiated claims about potential earnings for caregivers on its platform, advertising specific hourly and weekly rates without data to support these claims.
- Inflated job availability: The company was accused of significantly overstating the number of available jobs on its platform. The FTC claimed that more than half of the job postings were from users who had not purchased paid memberships and thus could not actually hire caregivers.
- Difficult cancellation process: Care.com allegedly violated the Restore Online Shoppers’ Confidence Act (ROSCA) by failing to provide a simple mechanism for consumers to cancel their subscriptions. The FTC described a convoluted, multi-step cancellation process that frustrated many users.
- Lack of transparency: The company was accused of failing to clearly disclose material terms of its subscription service before obtaining consumers’ billing information, another violation of ROSCA.
Under the settlement, Care.com has agreed to pay $8.5 million to the FTC, which will be used to provide refunds to consumers harmed by the company’s practices.
In addition, the company must adjust its marketing messages around earnings claims and job availability. The platform must also be clearer about how communication on the site works before taking subscribers’ money.
