The FTC announced that Chegg will pay $7.5 million and submit to a permanent injunction after the agency alleged the company deliberately obstructed consumer attempts to cancel subscriptions.

What is Chegg?

Chegg, Inc. is a publicly-traded ed-tech firm (NYSE: CHGG) offering academic subscription services (Chegg Study, Writing, Math) and language learning via its Busuu platform. In the second quarter of 2025, Chegg reported ~$105 million in total revenue, ~$90 million of which came from its subscription services. Its subscriber base dropped ~40% year-over-year to about 2.6 million. The company is in transformation mode, focusing on profitability, Skills & Busuu growth, AI, and sharper cost discipline.

What the FTC alleges:

According to the FTC’s complaint, Chegg forced subscribers through lengthy, multi-step cancellation flows that included buried links, discount offers, mandatory surveys, and “pause” options. These processes frequently left consumers believing they had cancelled when charges continued. The agency says Chegg charged nearly 200,000 consumers after they had tried to cancel since 2020.

The stipulated order, filed in federal court in the Northern District of California, requires Chegg to:

• Provide simple, easily accessible cancellation mechanisms at least as easy as the enrollment process.

• Stop all recurring charges immediately upon cancellation.

• Maintain compliance reporting and record-keeping for 10 years.

• Pay $7.5 million, which the FTC may use for consumer redress or deposit to the U.S. Treasury.

The FTC brought the case under both the FTC Act and ROSCA. Notably, the complaint charges Chegg with violating Section 4 of ROSCA by failing to provide “simple mechanisms” for cancellation—an enforcement approach the Commission has increasingly signaled it will apply across digital subscriptions.

INSIDER TAKE

This case matters far beyond Chegg:

1. ROSCA in Action:
   The FTC’s reliance on ROSCA is significant. While many expected ROSCA to be a dormant statute, the Commission is now actively deploying it against modern subscription businesses. The standard, requiring “simple mechanisms” to stop recurring charges, is clear, and enforcement is expanding.

2. Dark Patterns Under Scrutiny:
   Chegg’s flows read like a playbook of dark patterns: hidden links, pre-selected “pause” options, mandatory surveys, and repeated attempts to dissuade cancellation. The FTC’s complaint documents how executives were aware of consumer frustration, yet added more steps to the flows to “reduce cancellations.” For subscription operators, this is a cautionary tale: optimizing for short-term retention with friction can lead directly to regulatory exposure.

3. Financial and Operational Impact:
   The $7.5 million settlement is material, but the longer-term cost will be compliance obligations, record-keeping, and brand damage. For ed-tech and other digital services, the lesson is that cancellation must be as straightforward as enrollment, across all channels, including mobile.

4. Industry Signal:
   This case lands as the FTC finalizes its “Click-to-Cancel” rule, and states continue passing their own subscription laws. Together, they signal a new enforcement era where subscription businesses will be measured not by intent but by the simplicity of their flows. Executives should anticipate regulator reviews of onboarding, cancellation, and renewal practices and build compliance into product design from the start.

Bottom Line:
The Chegg settlement is not just about one ed-tech company—it’s a shot across the bow for the entire subscription economy. If cancellation takes more steps than signup, you are out of compliance.