Chegg, Inc., the California-based education technology company best known for its online tutoring and homework help services, has agreed to pay $7.5 million to settle allegations brought by the Federal Trade Commission (FTC). The FTC claimed that Chegg deliberately made it difficult for customers to cancel subscriptions and, in some cases, continued to charge them even after they believed they had successfully cancelled.
This case highlights the increasing scrutiny subscription-based businesses are facing from regulators who are targeting so-called “dark patterns”—website designs or processes that intentionally confuse consumers or make it hard for them to opt out of recurring charges.
The FTC’s Case Against Chegg
In its complaint, the FTC alleged that Chegg’s cancellation process was unnecessarily complicated and confusing. Customers were reportedly forced to click through multiple menus, with cancellation options hidden in less intuitive sections of the website.
In some cases, even after customers followed the steps to cancel, they were still charged for Chegg’s services in the following billing cycle. The FTC said nearly 200,000 consumers were improperly billed between October 2020 and 2024, resulting in millions of dollars in unwanted charges.
One piece of evidence that drew particular attention was an internal email from 2021 attributed to Nathan Schultz, then a senior executive and now Chegg’s CEO. The email allegedly said that the cancellation process should include “some pain.” Regulators cited this email as proof that Chegg was aware of the obstacles facing consumers but chose not to make the process easier.
Legal Grounds: FTC Act and ROSCA
The complaint accused Chegg of violating two key federal statutes:
- Section 5 of the FTC Act – which prohibits unfair or deceptive acts or practices in commerce. The FTC argued that Chegg’s cancellation process was not only inconvenient but misleading, as many customers believed they had successfully cancelled when they had not.
- Restore Online Shoppers’ Confidence Act (ROSCA) – which requires companies that use automatic renewal or recurring billing to clearly disclose terms, get consumers’ express informed consent, and provide a simple, easy-to-use cancellation mechanism. The FTC said Chegg failed to meet this last requirement by designing a needlessly complex cancellation process.
FTC Chair Lina Khan stated that this case reflects the agency’s commitment to protecting consumers from subscription traps:
“When businesses make it harder to get out of a service than it was to sign up, they undermine trust in the market. Companies must make cancellation simple and straightforward — not a game of hide-and-seek.”
Terms of the Settlement
Under the proposed federal court order, Chegg will:
- Pay $7.5 million in monetary relief, which the FTC says will be used to provide refunds to affected consumers.
- Implement a streamlined cancellation mechanism that is clearly labeled, easy to find, and allows customers to cancel online in just a few clicks.
- Inform current subscribers about the new process and provide confirmation when cancellations are completed.
- Maintain records of complaints and cancellation requests for FTC review to ensure compliance with the order.
Chegg has not admitted wrongdoing as part of the settlement but stated that resolving the matter allows the company to focus on improving customer experience without the distraction of litigation.
Chegg’s Response
Chegg issued a statement emphasizing its commitment to students and users, noting that it has already made changes to simplify subscription management. The company said the decision to settle was made to “avoid lengthy and costly legal proceedings” and to “put this matter behind us.”
While Chegg disagreed with parts of the FTC’s characterization, it said the agreement would help it move forward with renewed focus on delivering value to customers and improving transparency.
Broader Implications for the Subscription Economy
The Chegg case is part of a broader enforcement push by the FTC against subscription “dark patterns.” In recent years, regulators have taken action against major corporations including Amazon, Adobe, and fitness chains for similarly complicated cancellation procedures.
Earlier this year, the FTC attempted to implement a nationwide “click-to-cancel” rule, which would require businesses to make cancellation as easy as signing up. Although the rule was temporarily blocked in court, the agency has vowed to continue pursuing enforcement actions under existing statutes like ROSCA until stronger regulations are in place.
Legal analysts say the Chegg settlement sends a clear message to subscription-based businesses across industries: compliance is not optional. Companies should proactively review their cancellation flows, make links clearly visible, avoid unnecessary hurdles, and promptly process requests to avoid regulatory action and reputational damage.
What This Means for Consumers
For consumers, the settlement could lead to refunds if they were improperly billed. It also means that Chegg subscribers will soon have access to a more transparent, straightforward cancellation process — a win for customer rights.
This case reinforces the principle that businesses must honor cancellation requests and cannot rely on confusing user interfaces to keep customers paying.
Looking Ahead
The proposed settlement still requires judicial approval, but once finalized, Chegg will be legally bound to follow its terms. The FTC says it will continue monitoring Chegg’s compliance and will not hesitate to take further action if violations occur.
This development is likely to have a ripple effect across the subscription industry. With consumer advocacy groups and regulators paying closer attention, companies that rely on recurring billing models should see this case as a warning: the days of making cancellations a frustrating maze may be numbered.
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