Key takeaways

Shutterstock agreed to a $35 million settlement with the Federal Trade Commission regarding its negative option marketing practices.

The FTC alleged the online digital photo and video platform violated Section 5 of the FTC Act by charging consumers without informed consent.

The enforcement action targets illegal subscription and cancellation practices, signaling continued federal scrutiny of digital subscription models.

Companies utilizing recurring billing models must ensure their enrollment and cancellation mechanisms comply with federal consumer protection standards.

The Enforcement Action

The Federal Trade Commission announced a $35 million settlement with the online digital photo and video platform Shutterstock. The agreement resolves allegations that the company engaged in deceptive negative option marketing practices and illegal subscription and cancellation procedures. According to the agency's official announcement, Shutterstock to Pay $35 Million to Settle FTC Allegations Over Illegal Subscription and Cancellation Practices, the FTC claimed Shutterstock violated Section 5 of the FTC Act.

The core of the agency's complaint in Ftc v. Shutterstock centered on allegations that the company charged consumers for products without obtaining their informed consent. The settlement specifically addresses deceptive practices related to the company's online digital photo and video platform subscriptions, bringing an end to the immediate dispute while establishing clear financial consequences for the alleged conduct.

Why This Matters

This enforcement action demonstrates the federal government's continued focus on digital subscription models that trap consumers in recurring billing cycles. By securing a high-dollar settlement, the FTC signals that it will aggressively pursue companies that obscure their terms or make it unreasonably difficult for users to cancel their services.

The $35 million figure establishes a clear financial risk for digital platforms relying on automatic renewals without transparent consent mechanisms. It indicates that federal regulators view deceptive cancellation architectures as a primary target for consumer protection enforcement. Companies often rely on recurring revenue streams to maintain stable financial projections, but this settlement argues that such stability cannot come at the expense of consumer choice. When businesses erect barriers to cancellation, they distort the market by retaining customers who would otherwise leave. The FTC's action aims to correct this market failure by penalizing the specific mechanisms used to retain unwilling subscribers.

Who Should Care

For lawyers

Counsel advising e-commerce platforms, software-as-a-service providers, and digital media companies must review their clients' subscription enrollment and cancellation flows. The reliance on Section 5 of the FTC Act in Ftc v. Shutterstock provides a framework for how the agency interprets "unfair or deceptive acts or practices." Attorneys should audit user interfaces to ensure that consent to recurring charges is explicit, informed, and recorded, and that cancellation mechanisms are at least as accessible as the initial enrollment process. Legal departments must prioritize compliance reviews of all consumer-facing billing portals, paying particular attention to how terms are disclosed prior to the capture of payment information.

For consumers

Individuals who subscribe to online digital photo and video platforms, or any service utilizing automatic renewals, benefit directly from this enforcement. The settlement reinforces the legal requirement that companies must clearly explain what consumers are buying and obtain explicit permission before charging their credit cards. It attacks the practice of creating artificial barriers to cancellation, meaning users should find it easier to end subscriptions they no longer want or need. Consumers can point to this enforcement action as evidence that federal law protects their right to easily terminate recurring charges.

Legal Background of Negative Option Marketing

Negative option marketing refers to a commercial transaction where a seller interprets a customer's failure to take an affirmative action—either to reject an offer or cancel an agreement—as assent to be charged for goods or services. Historically, the FTC has governed these practices through the broad authority granted by Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in or affecting commerce.

Over the years, digital platforms increasingly adopted subscription models that automatically renew. Some of these models introduced friction into the cancellation process. The FTC has consistently maintained that if a company makes it easy to sign up for a service, it must make it equally easy to cancel. Prior guidance and enforcement actions established that failing to clearly disclose material terms before obtaining billing information, or charging consumers without their express informed consent, constitutes a violation of federal law. The agency views informed consent as a mandatory prerequisite for any recurring billing arrangement, requiring businesses to present terms clearly and conspicuously before a transaction is finalized.

What the Agency Did

In Ftc v. Shutterstock, the FTC targeted specific mechanisms the company used to manage its digital photo and video subscriptions. The agency alleged that Shutterstock's practices surrounding negative options were deceptive. Specifically, the FTC claimed the company failed to obtain informed consent before charging consumers.

The agency also alleged that Shutterstock deployed illegal cancellation practices, effectively trapping users in their subscriptions. To resolve these allegations, the FTC secured a $35 million payment from the company. The settlement addresses these deceptive practices directly, requiring the platform to alter how it handles online digital photo and video platform subscriptions. By linking the alleged Section 5 violations to a substantial monetary settlement, the FTC effectively penalized the company for its specific implementation of subscription and cancellation flows.

How It May Be Applied

The settlement sets a standard for how digital platforms must structure their billing and cancellation interfaces. Moving forward, companies utilizing negative option marketing will likely face strict scrutiny regarding their user experience design. Questions remain regarding exactly how much friction regulators will tolerate in a cancellation flow before deeming it illegal under Section 5.

However, the $35 million penalty suggests that the FTC will not hesitate to seek substantial monetary relief when it identifies practices that charge consumers without clear, upfront consent. Platforms offering digital media, stock photography, and other subscription-based content will need to proactively evaluate their checkout screens and account management portals to avoid similar enforcement actions. Compliance teams will need to work closely with web designers and product managers to ensure that marketing strategies do not cross the line into deceptive practices.

Comparing Practices

Practice Area	FTC Expectation under Section 5	Alleged Shutterstock Practice
Enrollment	Consumers must give informed consent before being charged.	Charged consumers for products without informed consent.
Cancellation	Mechanisms must be accessible and straightforward.	Engaged in illegal subscription and cancellation practices.
Marketing	Terms of negative options must be clear and non-deceptive.	Engaged in deceptive practices related to online platform subscriptions.

Plain-English Callout

Understanding Negative Option Marketing A "negative option," as defined by regulators, is a business practice where a company assumes you want to keep paying for a service unless you specifically tell them to stop. Common examples include free trials that automatically convert to paid subscriptions or monthly memberships that renew automatically. The law requires companies to be completely upfront about these terms before taking your payment information, and they cannot make it unreasonably difficult for you to cancel the service once you decide you no longer want it.

This article is general legal information and commentary about legal developments. It is not legal advice, does not address your specific situation, and is not a substitute for advice from a licensed attorney. Reading this article and contacting us through this website do not create an attorney-client relationship.

Sources & authorities

Shutterstock to Pay $35 Million to Settle FTC Allegations Over Illegal Subscription and Cancellation Practices — source
Ftc v. Shutterstock — source

Shutterstock Pays $35M to Settle FTC Negative Option Charges

Key takeaways