On September 15, 2025, the Federal Trade Commission (FTC) announced that it had reached a $7.5 million settlement with Chegg Inc., the popular education-technology company known for its online homework help and textbook services. The settlement resolves allegations that Chegg violated federal consumer-protection laws by making it unreasonably difficult for customers to cancel their subscriptions. According to the FTC’s complaint, Chegg buried the cancellation option behind multiple web menus, forcing users to click through a confusing maze just to stop being billed.
Background
The FTC described Chegg’s design as a classic “subscription trap,” a practice where companies make it easy to sign up but hard to leave. Internal emails revealed that Chegg executives were aware of the issue. In one now-public message, then-executive Nathan Schultz reportedly stated that there “should be some pain involved” in the cancellation process. That email became a focal point in the FTC’s case, suggesting that the company’s obstacles were not accidental but deliberately built to discourage cancellations. Even after some users believed they had cancelled, Chegg allegedly continued charging their credit cards, conduct the FTC characterized as both deceptive and unfair under Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which prohibits unauthorized recurring billing and misleading cancellation procedures.
The Settlement
As part of the settlement, Chegg agreed to pay $7.5 million to provide refunds to affected consumers and to implement a “simple cancellation mechanism” that is as easy to use as its sign-up process. The company did not admit wrongdoing, but it chose to settle to avoid the costs and uncertainty of litigation. The settlement comes at a time when regulators are increasingly focused on the subscription economy and on companies that rely on recurring billing models.
The Chegg case underscores the FTC’s ongoing efforts to protect consumers in the digital marketplace. Although the agency’s proposed “Click-to-Cancel” rule, which would have required businesses to make online cancellation as simple as enrollment, was vacated earlier this year by a federal appeals court, the FTC has continued to pursue enforcement actions under its existing authority. This latest settlement demonstrates that the agency does not need a new rule to go after companies that make cancellation unreasonably difficult.
Key Takeaways
For businesses that rely on subscription or auto-renewal revenue, the Chegg settlement should serve as a wake-up call. The FTC is making it clear that the design and intent behind a company’s cancellation process are just as important as its formal policies. Even without a new regulation, the agency is using existing statutes to hold companies accountable when consumers are effectively trapped in unwanted subscriptions. From a compliance perspective, businesses should ensure that cancellation is straightforward, clearly disclosed, and available through the same medium in which customers enrolled.
Beyond the regulatory implications, there are reputational and business-ethics considerations. In an era when customer trust and transparency define long-term success, making it difficult to cancel sends the wrong message. Consumers have grown increasingly wary of “dark patterns”, user-interface designs that trick or pressure them into making decisions. The FTC has already identified dark-pattern design as a top enforcement priority, and the Chegg case reinforces that warning.
Ultimately, this case is not just about Chegg. It is about how all subscription-based businesses design the user experience. Companies that fail to prioritize transparency and fairness risk both government scrutiny and consumer backlash. As the FTC continues to police deceptive digital practices, businesses that proactively simplify their cancellation processes, and document compliance efforts, will be far better positioned to avoid costly enforcement actions and maintain consumer goodwill.
Conclusion
Navigating FTC compliance, subscription disclosures, and evolving digital regulations can be complex. At Romano Law, our attorneys advise businesses on risk management, marketing practices, and consumer-protection compliance to help you stay ahead of enforcement trends. Whether you’re developing an online service, launching a subscription platform, or responding to an FTC inquiry, our team can guide you through the process.
Contact Romano Law today to schedule a consultation and ensure your business practices meet federal and state requirements before they become a liability.
Contributions to this blog by Kennedy McKinney.