Uber Stock Skids After FTC Files Lawsuit Alleging 'Deceptive' Practices

Uber Technologies, Inc. UBER shares are trading lower Monday after the Federal Trade Commission (FTC) filed a lawsuit against the company related to its Uber One subscription service.

What To Know: In a lawsuit filed on Monday, the FTC alleged that Uber engaged in several deceptive practices, including charging consumers for its Uber One subscription without their consent, failing to deliver on promised savings and making it difficult for consumers to cancel the service despite “cancel anytime” promises.

"Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel. The Trump-Vance FTC is fighting back on behalf of the American people. Today, we're alleging that Uber not only deceived consumers about their subscriptions, but also made it unreasonably difficult for customers to cancel," said FTC chairman Andrew Ferguson.

The lawsuit states that customers were automatically charged before their free trials ended, despite company promises that customers could cancel during the trial period. The FTC noted that users may need to navigate up to 23 screens and complete up to 32 steps to cancel their subscriptions. The lawsuit also said customers were wrongly promised $25 in monthly savings, even though the subscription cost, which can reach $9.99 per month, was not factored into that amount.

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The FTC alleged that the company's deceptive billing and cancellation practices violate the FTC Act and the Restore Online Shoppers' Confidence Act (ROSCA).

An Uber spokesperson told Benzinga that the company is “disappointed” that the FTC is pursuing the lawsuit, but is “confident” that the courts will side with the company.

"We are disappointed that the FTC chose to move forward with this action, but are confident that the courts will agree with what we already know: Uber One's sign-up and cancellation processes are clear, simple, and follow the letter and spirit of the law. Uber does not sign up or charge consumers without their consent, and cancellations can now be done anytime in-app and take most people 20 seconds or less,” an Uber spokesperson said.

UBER Price Action: Uber shares were down 4.18% at $72.10 at the time of publication Monday. According to data from Benzinga Pro, Uber shares are up nearly 20% year-to-date.

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