FTC Takes Action To Halt Allegedly Deceptive Subscription Schemes

The FTC has continued to crackdown on subscription billing and cancellation practices it considers unlawful.

Recently, at the urging of the FTC, a federal court agreed to temporarily stop a large business enterprise allegedly built on deceptive subscription schemes from continuing to deceive consumers with hidden costs and recurring charges, while failing to provide simple means to cancel their subscriptions.

“The Genesis Tech enterprise, along with its founder-CEOs Vladimir Mnogoletny and Vasily Ulianov, have built and operated a broad portfolio of misleading internet-based subscription schemes,” the FTC said, in a statement. “These schemes range from an online program that claims it can diagnose and treat ADHD symptoms to PDF editing tools, according to a complaint filed by the FTC. “The defendants deceptively market subscriptions to consumers and bill consumers without their permission, resulting in consumers worldwide being defrauded.”

“The Trump-Vance FTC is engaged in robust enforcement to address deception and illegal subscription offerings,” Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection, said.

The FTC complaint, filed in the U.S. District Court for the Northern District of California, alleges that Genesis Tech operates as a common enterprise through a network of entities that it controls. That network includes a series of affiliates it has incorporated in Cyprus and operated in Ukraine. The Cyprus companies market to U.S. consumers and access U.S. payment processing through counterparts incorporated in Delaware.

“Genesis Tech and its subsidiaries work together to continually launch new deceptive product offerings, register new corporate identities and open new merchant accounts,” the FTC said. “Together, Genesis Tech and its subsidiaries are able to hide their true identities from consumers and attempt to hide their assets by channeling ill-gotten gains through cross-border transfers among corporate affiliates,” the FTC’s complaint alleges.

The FTC complaint states that Genesis Tech and its subsidiaries have created and distributed dozens of varying deceptive product offerings, which include:

• MadMuscles, Harna and Unimeal (fitness and nutrition apps).
• Wisey (ADHD/productivity self-help courses).
• PDF Guru and PDF Master (PDF editing tools).
• Lumi (fashion consulting); and
• Nebula (horoscope readings and psychic chats).

From early 2023 to mid-2025, these five products accounted for nearly a quarter billion dollars in global revenue, the complaint alleged.

The FTC contended that regardless of the product, Genesis Tech and its subsidiaries harm consumers by deploying the following tactics:

• “Failure to disclose material terms: Defendants advertise products as being free or available for a low, one-time cost, often with a money-back guarantee. But when consumers sign up, the defendants obscure references to auto-renewing subscriptions or recurring charges. Their webpages fail to disclose material terms clearly and conspicuously, consistently relegating terms to the smallest print on the page.
• Charges without authorization: Defendants make unauthorized charges even beyond the undisclosed subscription fees, by double-charging consumers for the same product or by adding more products to the transaction without consumers’ knowledge or consent.
• Failure to provide simple cancellation mechanisms:Defendants make cancellation difficult, for example, by omitting cancellation options from their websites and apps or requiring consumers to explain why they want to cancel, and, even after confirming cancellation, continue charging or attempting to charge users without authorization.”

The FTC accused Genesis Tech and its affiliates of continuing to “churn out new deceptive products, continually register new companies and open fresh merchant accounts to avoid fraud monitoring programs. The result is an ever-evolving web of Cyprus and Delaware shell companies that allows Genesis Tech and its subsidiaries to continue defrauding U.S. consumers and routing their ill-gotten gains overseas, the FTC’s complaint further alleges.”

The FTC contended that the companies’ practices violate the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). The complaint also names Stamatis Skianis, Oksana Kucher, Iryna Oleksyn, Olga Garbuzenko, Rostyslav Ivanitsa and Viktoriia Savchuk as co-defendants.

Shutterstock

In another subscription case earlier this Spring, the FTC announced that Shutterstock Inc. will pay $35 million to settle allegations that the “online digital photo and video platform illegally made tens of millions of dollars from a range of unfair and deceptive practices, including charging consumers for products without their informed consent and making it difficult to cancel subscriptions.”

New York-based Shutterstock licenses stock photos, graphics, videos and music clips that consumers can pay to use. Since at least 2020, the company has offered most of its content through online subscriptions, which allow consumers to download a specified number of pieces of content per month and retain a license to use the content for a set time.

According to the agency’s complaint, “Shutterstock advertised on-demand packs as ‘Best for a one-time project,’ with ‘no commitment,’ but did not adequately disclose that these packs automatically renewed when the last download in the pack was used and—until early 2024—that they automatically renewed after one year.”

The complaint further alleged that the “plan selection” page of Shutterstock’s desktop [annual paid monthly (APM)] enrollment flow frequently failed to clearly disclose material terms of the APM plans including that the plans will automatically renew at the end of each year and that consumers will be charged a fee to cancel an APM plan before the end of the term.” Shutterstock often buried such details in difficult-to-find fine print, the complaint alleged.

The FTC’s complaint charged Shutterstock with:

• “Failing to clearly and conspicuously disclose material terms before billing. Shutterstock failed to disclose the renewal terms, what cancellation fees applied and when, and the amount of the fees.
• Failing to obtain consumers’ express informed consent. Shutterstock failed to get consent to charge consumers’ credit cards before charging them for subscriptions and content packs.
• Failing to provide simple cancellation mechanisms. Shutterstock [also] … failed to provide simple means for consumers to cancel their subscriptions. For example, before 2024, consumers could not complete early cancellation online and were required to contact customer support by phone, chat, or email, all of which were a complicated and time-consuming process.”

Under the FTC’s proposed order, filed in U.S. District Court for the Southern District of New York, Shutterstock will pay $35 million, which will be used to provide relief to the consumers harmed by Shutterstock’s illegal billing and cancellation practices. “The proposed order also prohibits Shutterstock from misrepresenting material terms of its subscription offerings and requires it to disclose material terms of its subscription offerings, obtain consumers’ express informed consent to charges and maintain simple cancellation mechanisms for negative option features,” according to the FTC.