Care.com Agrees to $8.5M Settlement Over FTC Charges of Deceptive Practices

Care.com, a subsidiary of IAC Inc, has reached an agreement to pay $8.5 million to settle charges brought by the U.S. Federal Trade Commission (FTC). The settlement, filed on August 26, 2024, in a federal court in Austin, Texas, addresses allegations that the company exaggerated job availability and made it challenging for customers to cancel their memberships.

Founded in 2006, Care.com has grown to become a prominent platform for connecting caregivers with those seeking in-home care services for children, seniors, and pets across more than 20 countries. The company, which was acquired by IAC Inc in 2020 for approximately $500 million, has faced scrutiny over its business practices.

The FTC's charges stem from tens of thousands of customer complaints, many of whom believed they had canceled their memberships but continued to be billed. The settlement funds will be used to provide refunds to affected customers.

According to the FTC, Care.com allegedly enticed consumers to purchase auto-renewing memberships by overstating the number of available jobs and potential earnings on its platform. The commission contends that the company knew or should have known that a significant portion of these job listings were unlikely to result in actual employment.

Furthermore, the FTC accused Care.com of employing deceptive website designs to complicate the cancellation process. This included a misleading "Submit" button that gave users the false impression of successful cancellation and a "Cancel" button that paradoxically halted the cancellation process.

The settlement requires Care.com to implement a "simple mechanism" for customers to avoid unwanted renewals and to substantiate employment claims on its website. Samuel Levine, the FTC's consumer protection chief, stated:

"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. The order announced today puts a stop to these unlawful practices."

It's worth noting that between January 2019 and March 2022, approximately 2.9 million U.S. consumers purchased at least one auto-renewing membership from Care.com. This period coincides with the company's acquisition by IAC Inc and its continued expansion in the caregiving industry.

While Care.com has not admitted or denied wrongdoing in the settlement, the company will need to address these issues to maintain trust with its user base, which as of 2021, included over 35 million members across 20 countries. The platform, known for its algorithm-based matching of caregivers with families, offers both free and paid membership options and has partnerships with several large corporations for employee care benefits.

As the caregiving industry continues to evolve, this settlement serves as a reminder of the importance of transparency and ethical practices in digital platforms. The outcome of this case may influence how similar companies operate in the future, particularly in terms of job listings and subscription management.