Have you ever tried to cancel an app subscription, only to feel like you were trapped in an endless maze of “Are you sure?” screens, hidden buttons, and multi-day delays? Or worse… have you ever realized an app you trusted with personal information was quietly sharing your details with advertisers?
Mobile and digital subscriptions have made buying products incredibly convenient, but that direct access to consumers comes with huge ethical responsibilities. When companies rely on sneaky digital tactics to keep charging credit cards or misuse personal data, they don’t just alienate customers, they run straight into severe legal consequences.
A prime example of this is the Federal Trade Commission’s (FTC) major enforcement action against the online telehealth platform Cerebral, Inc. It serves as a massive wake-up call for modern marketers, showing exactly what happens when growth strategies cross legal and ethical lines.
What Laws Were Violated?
The FTC’s complaint against Cerebral centered on two core legal frameworks that govern digital and mobile marketing:
- The Restore Online Shoppers’ Confidence Act (ROSCA): ROSCA makes it illegal for online merchants to charge consumers using automatic renewals or recurring subscriptions unless they clearly disclose all terms upfront, get explicit consent, and offer a simple way to cancel. Cerebral violated ROSCA by trapping users in complex subscription loops while promising they could “cancel anytime.”
- Section 5 of the FTC Act: This law prohibits unfair or deceptive trade practices. Cerebral violated Section 5 by misleading users about data privacy, promising strict confidentiality while quietly using tracking pixels on its mobile site and app to share sensitive health info with third-party ad networks for targeted marketing.
How This Hurt Consumers
When companies use deceptive user experience design, often called dark patterns, it causes real, measurable harm to everyday people:
- Unwanted Financial Stress: Cerebral made clients navigate a multi-step, multi-day process just to end their service, and they “slow-walked” cancellation requests while continuing to charge monthly fees. Over 40,000 people who asked to cancel were kept on the hook and billed anyway.
- Severe Privacy Exposure: Sensitive health details, intake answers, and mental health diagnoses were fed into ad networks so third parties could target ads back at users. For a healthcare platform, exposing private patient data for advertising is a massive breach of trust.
The Price Cerebral Paid
Violating digital marketing laws isn’t just a bad look… it carries crippling financial penalties:
- Over $5 Million in Direct Refunds: As part of the settlement, an independent administrator sent refund checks and PayPal payments totaling more than $5 million to 40,249 affected consumers.
- Massive Fines and Restrictions: The FTC imposed over $15 million in total fines and civil penalties. On top of the money, Cerebral was permanently banned from sharing sensitive health data with third-party advertisers and ordered to fix its cancellation process immediately.
How Marketers Can Stay Ethical
If you want to build a sustainable business, your marketing strategy needs to be built on trust, not trickery. Here is how ethical marketers keep their campaigns compliant:
- Make Cancellation “One-Click” Simple: Ending a subscription should be just as quick and easy as signing up. Never use dark patterns or artificial delays to force people to keep paying.
- Be Completely Transparent Upfront: Clearly lay out billing schedules, price changes, and renewal dates before asking for payment details.
- Treat Customer Data as Sacred: Never track or share sensitive user information (especially health or location data) without explicit, opt-in consent from the user.
At the end of the day, sneaky tactics might boost your short-term numbers, but they will cost you far more in the long run through regulatory fines, legal battles, and a ruined reputation.
References
- Federal Trade Commission. (2024, April 15). Proposed FTC order will prohibit telehealth firm Cerebral from using or disclosing sensitive data for advertising purposes, and require it to pay $7 million. U.S. Federal Trade Commission Press Release.
- Federal Trade Commission. (2025, May 8). More than $5 million in refunds sent to consumers as a result of the FTC’s action against Cerebral over deceptive cancellation practices. U.S. Federal Trade Commission Press Release.
Leave a Reply