Shutterstock Inc. has agreed to a $35 million settlement to resolve charges brought by the Federal Trade Commission that the company's subscription practices, dating back to at least 2020, failed to provide consumers with clear, material information prior to billing.
The FTC's complaint alleges two central shortcomings. First, it says Shutterstock marketed on-demand packs as suitable for one-off projects with no commitment, while not clearly disclosing that those packs would automatically renew when the customer's last download was used - and, until early 2024, would renew on an annual cycle. Second, the agency faulted Shutterstock's annual paid monthly subscription plan pages for frequently failing to plainly state that plans would automatically renew at the end of each year and that customers could be charged a fee for cancelling before the term expired.
According to the complaint, disclosures about automatic renewal and early-cancellation fees were placed in fine print that was difficult for consumers to find. The FTC charged Shutterstock with several violations: not clearly disclosing key subscription terms before billing, not obtaining express informed consent prior to charging customers' credit cards, and failing to provide a simple mechanism for cancellation.
The agency noted that before 2024, customers who wanted to cancel early could not complete that process online. Instead, they had to contact Shutterstock customer support by phone, chat, or email. The proposed settlement requires the company to change these practices and to provide relief to harmed consumers using the $35 million payment.
If approved, the proposed order will bar Shutterstock from misrepresenting material subscription terms, require clear and prominent disclosure of material terms, mandate that the company obtain express informed consent prior to charging consumers' payment methods, and obligate Shutterstock to maintain straightforward cancellation mechanisms.
The Commission vote to authorize staff to file the complaint and proposed order was 2-0. The FTC filed the case in the U.S. District Court for the Southern District of New York.
Summary
- FTC alleges Shutterstock failed to disclose automatic renewal and cancellation fee terms since at least 2020.
- Company is accused of charging consumers without express informed consent and of making early cancellation difficult prior to 2024.
- $35 million settlement will be used to compensate affected consumers; proposed order imposes disclosure, consent, and cancellation requirements.
Key points
- Regulatory action centers on consumer protection regarding subscription disclosures and billing practices.
- The alleged shortcomings affected both on-demand packs and annual paid monthly subscription pages.
- Sectors impacted include digital media and consumer subscription services, with potential implications for other online subscription businesses.
Risks and uncertainties
- Uncertainty remains on the specifics of consumer relief distribution from the $35 million fund.
- Operational changes required by the proposed order could affect how Shutterstock structures and markets subscription products.
- The outcome depends on the court process in the Southern District of New York and any further legal developments.