The United States Federal Trade Commission (FTC) has filed a lawsuit against Amazon, accusing the company of deceiving customers into signing up for its Prime service without their consent and frustrating their attempts to cancel their subscriptions.
In its complaint, which contains significant redactions, the FTC alleges that Amazon employed “dark patterns,” manipulative user-interface designs, to trick consumers into enrolling in automatic Prime subscriptions, relying on methods that were coercive, deceptive, or manipulative.
Lina Khan, the FTC chair, stated, “Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money.”
Amazon responded to the FTC’s claims, asserting that they are “false on the facts and the law,” and asserting that canceling Prime membership is “clear and simple.”
The company further argued that the lawsuit was hastily announced by the regulator without giving Amazon an opportunity to discuss the facts, context, and legal issues with the FTC staff or commissioners.
This legal action is part of an ongoing campaign against major technology companies like Amazon, Google, and Meta, led by Khan and other antitrust regulators in Washington. They aim to curb what they perceive as anti-competitive or anti-consumer business practices.
First introduced in 2005, Amazon Prime initially cost $79 per year and provided subscribers with free two-day shipping. Over time, it expanded to include additional services, such as a digital video library, music, photos, and gaming. The subscription’s value varies for each consumer based on their usage of the services.
The FTC alleges that nonconsensual enrollment into Prime was a well-known issue within Amazon. Despite this knowledge, the company and its leadership deliberately avoided making user experience changes that would reduce nonconsensual enrollment, as those changes would also negatively impact Amazon’s financial performance, according to the complaint.
According to the complaint, Prime subscription fees contribute $25 billion to Amazon’s annual revenue, and the company’s total revenue reached $514 billion last year. Insider Intelligence predicts that the number of Amazon Prime users in the US will reach 174.9 million this year, roughly 66% of the US population.
The FTC highlighted that Amazon recently made significant changes to the Prime cancellation process for some users. However, prior to these modifications, customers had to navigate a lengthy 15-step, six-click cancellation process, while signing up for Prime only required one or two clicks.
The regulator alleges that Amazon’s objective with this convoluted cancellation process, referred to as “Iliad,” named after Homer’s epic poem about the arduous Trojan War, was to hinder subscribers.
This is the second challenge the FTC has brought against Amazon in as many months. In May, Amazon agreed to pay $25 million to settle a lawsuit involving the FTC and the US Department of Justice, which accused the company of violating children’s privacy laws.
The regulators claimed that Amazon stored recordings of children captured by its Alexa voice assistant without a time limit and failed to comply with parents’ requests for deletion. Amazon disagreed with the FTC’s allegations in that case.
Prior to her appointment as FTC chair by President Joe Biden, Khan published an academic paper advocating for the breakup of Amazon.
Amazon has called for Khan’s recusal from any matters involving the company due to her longstanding criticism of the company. However, Khan has stated that she has no financial conflicts or personal ties that would necessitate recusal under federal ethics laws.
In the Prime case, the FTC is requesting monetary penalties and injunctive relief to prevent further harm to customers.
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