The Federal Trade Commission is filing a lawsuit against Amazon, alleging that the company has been enrolling customers into its Prime subscription program without their consent and making it difficult for them to cancel. In the complaint filed in Washington state, the FTC claims that Amazon has used deceptive designs to trick millions of consumers into signing up for Prime. Additionally, the agency states that Amazon has deliberately made it harder for customers to make purchases on the platform without subscribing to Prime. The company has been accused of violating the FTC Act and the Restore Online Shoppers’ Confidence Act.
Internally, Amazon referred to this process as “Iliad,” alluding to the ancient Greek poem about the Trojan war. FTC Chair Lina Khan criticized Amazon’s actions, stating that they have misled and trapped users into recurring subscriptions, causing frustration and financial loss. She also emphasized that such tactics harm consumers and law-abiding businesses alike.
Amazon’s Prime membership program provides customers with faster shipping and access to the Prime Video streaming service. In the first quarter of this year, the company reported revenue of $9.6 billion from Prime subscriptions, a 17% increase compared to the same period last year.
An Amazon spokesperson has denied the FTC’s allegations, calling them false on both factual and legal grounds. The spokesperson stated that Amazon clearly and simply communicates the terms of Prime membership to customers, making it easy for them to join or cancel the subscription. The company is committed to improving the overall customer experience, taking customer feedback into account. NetChoice, a tech lobbying group including Amazon as a member, has criticized the FTC for overreaching with this complaint.
Amazon has faced increasing regulatory scrutiny as it expands its e-commerce dominance and ventures into new markets like groceries and healthcare. The company has also faced previous lawsuits regarding the complexity of canceling Prime memberships. In response to the FTC’s investigation, Amazon published a blog post in March providing detailed instructions on how to cancel Prime memberships.
The FTC’s lawsuit against Amazon comes shortly after the agency secured a victory related to another Amazon case. In that instance, Amazon agreed to pay a $25 million civil penalty for allegedly violating a child privacy law by storing data recorded by its Alexa voice assistant. The company also settled allegations of privacy violations involving its Ring doorbell camera, agreeing to pay $5.8 million in customer refunds.
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