Federal regulators sued Uber Technologies Monday, alleging the ride-hailing and food-delivery company enrolled people into its Uber One subscription service without their consent and made it difficult for users to cancel the service. Uber stock fell in afternoon trading.
The lawsuit from the Federal Trade Commission accuses Uber of violating the Restore Online Shoppers' Confidence Act, which requires online retailers to clearly disclose the terms of the service they sell and provide an easy way to cancel a recurring subscription.
Uber One launched in 2021 and offers fee-free delivery and discounts on some rides for $9.99 per month. But the FTC said customers are "wrongly promised" savings of $25 per month if they sign up, which doesn't account for the cost of the subscription itself.
Customers looking to cancel Uber One have had to "navigate as many as 23 screens and take as many as 32 actions to cancel," the FTC said in a news release.
Uber said that its practices do not violate the law.
"We are disappointed that the FTC chose to move forward with this action, but are confident that the courts will agree with what we already know: Uber One's sign-up and cancellation processes are clear, simple, and follow the letter and spirit of the law," a company spokesperson said in an emailed statement. "Uber does not sign up or charge consumers without their consent, and cancellations can now be done anytime in-app and take most people 20 seconds or less."
Uber Stock Falls
Meanwhile, Uber stock is down more than 4% at 71.89 on the stock market today. Shares were already lower before the FTC published an alert about the lawsuit around 1 p.m. Eastern Monday. Shares pushed slightly lower following the news.
However, Uber has gained about 19% so far this year, compared to a 13% loss for the S&P 500. Uber stock bounced-back after slumping 20% in the final three months of 2024. Some analysts believe that the ride-hail stock could prove resilient in an economic slowdown.
The lawsuit comes as investors are parsing how the Trump administration will approach tech regulation. Wall Street analysts have expected looser enforcement for tech from the FTC under President Donald Trump compared to the Biden administration.
"Americans are tired of getting signed up for unwanted subscriptions that seem impossible to cancel," FTC Chairman Andrew Ferguson said in a news release. "The Trump-Vance FTC is fighting back on behalf of the American people."
