Care.com reaches $8.5 million settlement with US FTC over membership renewals

By Jonathan Stempel

(Reuters) – Care.com, a platform for providing in-home care services to children, older adults and pets, agreed to pay $8.5 million to settle U.S. Federal Trade Commission charges it grossly inflated the number of available jobs and made it difficult for customers to cancel memberships.

The settlement with the unit of IAC Inc was filed on Monday in the federal court in Austin, Texas, and requires a judge’s approval.

It followed tens of thousands of complaints from Care.com customers, including many who thought they canceled memberships but were billed again. The $8.5 million will go toward refunds.

Care.com did not admit or deny wrongdoing in the settlement. It had no immediate comment.

The FTC accused Care.com of enticing people to buy auto-renewing memberships by overstating the number of jobs, or “gigs,” available on its platform, and the amounts that people could expect to earn from them.

It said Care.com knew or should have known a significant number of the jobs were unlikely to result in employment.

The FTC said Care.com then “frustrates” customers seeking to cancel by using deceptive website designs, including a “Submit” button that misleads them into believing they canceled, and a “Cancel” button that actually stops the cancellation process.

About 2.9 million U.S. consumers bought at least one Care.com auto-renewing membership between January 2019 and March 2022, the FTC said.

Monday’s settlement requires Care.com to provide a “simple mechanism” for customers to avoid unwanted renewals, and be able to back up employment claims on its website.

“Care.com used inflated job numbers and baseless earnings claims to lure caregivers onto its platform, and used deceptive design practices to trap consumers in subscriptions,” FTC consumer protection chief Samuel Levine said. “The order announced today puts a stop to these unlawful practices.”