In an unprecedented move, the Federal Trade Commission (FTC) has filed a lawsuit against e-commerce giant Amazon, accusing the company of using deceptive tactics to pressure customers into subscribing to its Prime membership and making it difficult for them to cancel their subscriptions. This marks the most severe action taken against Amazon by the agency’s chair, Lina Khan.
According to the FTC, Amazon has “duped millions of consumers” by employing manipulative and coercive website design techniques, also known as “dark patterns,” to entice customers into signing up for Prime. The agency claims that Amazon knowingly made it complicated for customers to cancel their subscriptions, adding burdensome steps in the process.
Prime, Amazon’s subscription service, boasts over 200 million subscribers worldwide and offers benefits such as free shipping, access to streaming services, and more. The service costs $139 per year or $14.99 per month in the US and £95 per year in the UK. The FTC alleges that Amazon intentionally made it nearly impossible for customers to opt out of auto-enrollment because such changes would negatively impact the company’s profits.
In the lawsuit filed in federal court in Seattle, the FTC highlights Amazon’s lengthy and convoluted cancellation procedure. The agency refers to the process as “Iliad,” comparing it to the Greek classic about the long and arduous Trojan War. The cancellation procedure allegedly consists of a four-page, six-click, fifteen-option process, which further frustrates customers who wish to cancel their subscriptions.
While Amazon did make changes to the cancellation procedure shortly before the lawsuit was filed, the FTC argues that the company’s actions still violated consumer protection laws. The agency claims that Amazon tricked and trapped people into recurring subscriptions without their consent, resulting in significant financial losses for users.
The FTC further alleges that Amazon was aware of the issue, as the company signed up customers for Prime without obtaining their permission and made it difficult for them to understand the complex cancellation process. Despite being aware of these problems, Amazon failed to take significant action to rectify the situation until confronted by the FTC’s investigation.
In response to the lawsuit, Amazon stated that it had been working to resolve the issues with the agency before the case was unexpectedly filed. The company emphasized that it strives to make it clear and simple for customers to both sign up for and cancel their Prime memberships. Amazon also mentioned its recent legal disputes with the FTC concerning its Alexa home assistant devices and Ring home security division, in which settlements were reached to address privacy and data gathering concerns.
The FTC is seeking a court order that would require Amazon to change its practices and impose monetary penalties on the company. This lawsuit serves as a significant test for Amazon and its business practices, as well as a signal of the FTC’s renewed focus on scrutinizing big tech companies for potential antitrust and consumer protection violations.
As the legal battle unfolds, it remains to be seen how Amazon will address the allegations and whether the outcome of the case will have broader implications for the e-commerce industry as a whole. With the stakes high and public scrutiny intensifying, the outcome of this lawsuit could reshape the way companies like Amazon approach their subscription services and consumer interactions, ultimately impacting millions of customers worldwide.