The Federal Trade Commission (FTC) has taken legal action against Amazon, accusing the e-commerce giant of deceiving customers and hindering their attempts to cancel their Prime subscriptions. The FTC claims that Amazon violated the FTC Act and the Restore Online Shoppers’ Confidence Act by employing deceptive design tactics known as dark patterns to manipulate users into enrolling in Prime without their consent.
FTC Chair Lina Khan emphasized the impact of Amazon’s actions, stating, “Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money.” In response, Amazon spokesperson Heather Layman refuted the allegations, declaring that the FTC’s claims were unfounded.
Despite the legal dispute, Amazon’s shares remained stagnant during afternoon trading. The FTC had been investigating Amazon’s Prime sign-up and cancellation procedures since March 2021. The tensions escalated when the agency aimed to have CEO Andy Jassy and founder Jeff Bezos testify on the company’s Prime practices, which Amazon resisted. Eventually, the FTC rejected Amazon’s stance.
Launched in 2005, the Prime program has gained immense popularity and boasts over 200 million members worldwide. Priced at $139 per year, the subscription service offers benefits like free shipping and access to streaming content, contributing significantly to Amazon’s revenue.
The lawsuit, filed in the U.S. District Court for the Western District of Washington, alleges that Amazon purposely impeded changes that would have facilitated the cancellation of Prime memberships, as these alterations would have negatively impacted the company’s profits. Additionally, the FTC asserts that Amazon made it challenging for customers to make purchases on their platform without subscribing to Prime.
The cancellation process itself is allegedly convoluted, designed to discourage customers from terminating their Prime subscription. The FTC revealed that Amazon internally referred to this process as “Iliad,” alluding to Homer’s epic poem about the Trojan War. These allegations are supported by a report from Insider.
Notably, this marks the third lawsuit filed by the FTC against Amazon in recent months. In late May, Amazon agreed to pay the FTC over $30 million to settle cases related to privacy breaches in its Alexa and Ring units. While Amazon disagreed with the claims made by the FTC, the company chose to settle the matter to move forward.
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