Vonage Bows Down Before FTC Directive; To Pay A $100M Penalty

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  • Communications firm Vonage agreed to pay $100 million to resolve a Federal Trade Commission (FTC) lawsuit, Reuters reported.
  • FTC prosecuted Vonage for failing to provide a simple method for customers to cancel their telephone services and imposed "junk fees," the agency said.
  • Vonage, which Ericsson ERIC acquired earlier this year in a $6.2 billion deal, had created significant obstacles to deter and prevent customers from stopping recurring charges, the FTC alleged and proposed settlement in U.S. District Court in New Jersey.
  • The $100 million will be turned over to the FTC to provide consumer refunds.
  • Vonage also agreed to offer clear disclosures about recurring charges and a simple method to stop recurring payments or avoid increased costs.
  • "Vonage made it easy to sign up but much harder to cancel, sometimes trapping consumers in an endless loop of call transfers," FTC Chair Lina Khan said on Twitter. 
  • "In some cases, Vonage kept charging customers or hit them with hidden early termination fees."
  • Price Action: ERIC shares traded higher by 1.31% at $5.43 in the premarket on the last check Friday.
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