Chegg to Pay $7.5 Million After FTC Says Cancellation Process Was Buried
Chegg Inc. agreed to pay $7.5 million to resolve Federal Trade Commission allegations that the education technology company made it difficult for students and parents to stop recurring subscriptions, the FTC announced on September 15, 2025. The agency filed a complaint in federal court in San Jose charging that Chegg hid cancellation options behind multiple menus and continued billing some customers after they had requested cancellations.
The FTC says nearly 200,000 consumers were billed after they attempted to cancel since October 2020, and that the company failed to improve visibility of cancellation links despite repeated consumer complaints and internal recognition of the problem.
Under the proposed court order settling the case, Chegg must both pay refunds and implement a simple cancellation mechanism for its auto renewing services.
“It harms the American people when companies fail to provide simple mechanisms to cancel recurring charges as Congress required in the Restore Online Shoppers’ Confidence Act,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection.
Court filings and media reporting show the FTC relied in part on internal Chegg communications. Reuters reported an internal 2021 email from then senior executives that said cancellation should involve “some pain involved” when customers tried to opt out, a message the agency highlighted as evidence the company understood the effect of its design choices.
Chegg told Reuters it disagreed with the FTC’s claims but chose settlement to avoid prolonged litigation.
The legal action follows a pattern of recent FTC enforcement targeting subscription practices. In 2025 the agency sued other firms over onerous cancellation procedures, including cases against ride service subscriptions and gym operators, and it continues to use existing statutes such as the Restore Online Shoppers’ Confidence Act to challenge companies that rely on negative option features.
The FTC says the Chegg case will require the company to maintain clearer cancellation options and to stop misrepresenting how consumers can stop recurring charges.
Chegg provides a range of study services from homework help to textbook rentals and counts millions of users, many of them students who access subscriptions through the website and mobile apps.
Consumer advocates told reporters that confusing cancellation flows are a common cause of surprise charges for younger customers and their families, and that clearer controls are essential when services are marketed with trial periods and automatic renewals.
The FTC’s complaint lists several examples in which customers had to click through multiple menus or complete burdensome steps to reach a cancellation screen.
Industry observers say the settlement may spur other subscription-based companies to review their customer interfaces and billing disclosures. Legal counsel who track consumer protection cases note that the FTC’s focus on how controls are presented is a practical enforcement lever.
The agency’s proposed order not only delivers refunds but also requires a durable change to how Chegg presents cancellation options so that stopping a subscription is as straightforward as starting one, as required by ROSCA.
Chegg’s regulatory record includes prior actions with the FTC over data security, and the company is currently involved in other litigation regarding platform traffic and antitrust concerns. Company executives face the dual task of addressing long running legal and consumer trust questions while maintaining services used by students during critical academic periods.
In a statement accompanying the settlement documents Chegg said it settled to avoid further expense and distraction, and it will comply with the proposed order.
The Chegg settlement arrives amid heightened scrutiny of subscription practices across consumer technology.
Lawmakers and regulators have stepped up oversight as subscription models proliferate in education, fitness, media and software, and the FTC’s action signals the agency will continue pressing companies to make cancellation routes transparent and effective. The court will now consider the proposed order and the mechanics by which refunds and user interface changes will be enforced.
The outcome will affect how companies design recurring billing flows and how consumers expect to manage subscriptions.
Consumers, regulators and investors will watch whether the proposed changes reduce surprise charges for students and whether the industry adopts clearer standards for opt out features and cancellation transparency.
