On May 13, the Federal Trade Commission (FTC) filed and simultaneously settled a lawsuit against online digital photo and video platform Shutterstock, Inc. in the Southern District of New York, alleging that the company used deceptive “negative option” subscription practices in violation of § 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). According to the complaint, Shutterstock misled consumers about its “annual, paid monthly” (APM) plans and on‑demand “packs,” failed to clearly disclose automatic renewals and hefty early‑termination fees, converted “free trials” into paid annual plans without adequate notice, and made it difficult and time‑consuming for customers to cancel.

The FTC alleges that Shutterstock promoted APM plans as simple monthly subscriptions and advertised image “packs” as “best for a one‑time project” with “no commitment,” while burying or omitting key terms: automatic renewal; automatic “refills” of packs when the last download was used; and cancellation fees equal to 50% of remaining contract obligations. The complaint cites internal emails acknowledging that customers “don’t realize what they have signed up for,” that the cancellation fee was a “constant source of confusion/frustration,” and that the company implemented and increased cancellation fees as a “powerful retention tool.” The FTC also describes a multi‑step, eight‑screen online cancellation flow and broken or hard‑to‑find phone and email processes as unlawful barriers to cancellation under ROSCA’s “simple mechanism” requirement.

Under the stipulated order, Shutterstock does not admit liability but agrees to a permanent injunction and a $35 million monetary judgment for consumer redress. Going forward, Shutterstock must clearly and conspicuously disclose all material terms of any negative‑option offer (including renewal, billing frequency, cancellation fees, and how to stop charges) before obtaining billing information; obtain express informed consent to those terms; and provide cancellation mechanisms that are easy to find and at least as simple as enrollment, including true one‑click online cancellation and a functional customer‑service phone line. The order also imposes detailed compliance, reporting, and recordkeeping obligations and authorizes the FTC to monitor ongoing compliance.

Our Take

For subscription‑based businesses, the Shutterstock case is another clear signal that the FTC and other regulators are focused on subscription “dark patterns,” inadequate disclosure of renewal terms and fees, and friction‑filled cancellation flows. Companies should expect increased scrutiny of how they present pricing and term information online, how and when they obtain consent, and whether their cancellation processes truly qualify as “simple mechanisms” under ROSCA and state law analogues.