Amazon Defends Prime Service, Amid FTC Lawsuit

UNP: Amazon Prime Now launched in London, UK

Amazon denies it has been duping millions of subscribers of the Amazon Prime service, as it seeks dismissal of FTC lawsuit

Amazon has defended its Prime Service, as it seeks to dismiss the antitrust lawsuit from the Federal Trade Commission (FTC).

Reuters reported that Amazon has denied duping millions of subscribers to its Amazon Prime service, asking a US judge in Seattle to dismiss the FTC lawsuit that the e-commerce giant said “fails in its entirety.”

In June the FTC had sued Amazon over allegations it “knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime.”

Image credit Amazon

Amazon Prime

The FTC accused the e-commerce giant of using “manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions.”

Then the FTC publicly named three senior Amazon executives, who it alleged took part in the “years-long effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their Prime subscriptions.”

Amazon had launched its Prime program back in 2005 and it has grown to become one of the most popular subscription services in the world, with more than 200 million members globally.

Prime generates billions of dollars for Amazon, and it gives users speedy deliveries and access to its streaming TV and music content.

Indeed its original role upon its 2005 launch was to deliver for free within two days for members. Over the years Prime benefits have expanded, and one of its key benefits currently is Prime Video, which offers a vast selection of movies and TV series, including Amazon Originals, and live sport.

Entertainment content on Prime Video was further expanded in May 2021 when Amazon purchased veteran film studio MGM for $8.45 billion.

Recently Amazon confirmed earlier reports that it would including advertising, when it said that ads would feature in the Prime Video service in 2024, unless users opt for a higher cost ad-free subscription plan.

Dismissal attempt

Now Reuters reported that Amazon attorneys on Wednesday urged US District Judge John Chun to dismiss the FTC’s claims that the company had tricked consumers into enrolling for Prime and made it hard for them to cancel.

In its filing, Amazon said it “prominently and repeatedly” disclosed key terms – including price and automatic renewal – to Prime customers. Amazon also accused the FTC of seeking to punish the company through “undefined concepts” such as “manipulative” website designs.

“In a case supposedly about clarity, the FTC’s purported standards are unconstitutionally opaque,” Amazon reportedly said.

A spokesperson for the FTC did not immediately respond to a request for comment.

An Amazon spokesperson in a statement told Reuters that Prime’s sign-up and cancellation processes “are clear and simple by design” and “have always met a standard for customers well above legal requirements.”

The lawsuit is part of the Biden administration’s ongoing regulatory and enforcement squeeze on big technology companies.

In a separate case, the FTC in September also accused Amazon of violating US antitrust law in business practices that restrict merchants from offering lower prices than Amazon’s. That case is also pending in Chun’s Seattle court.

The FTC’s Prime lawsuit said Amazon “under substantial pressure” from the FTC changed its cancellation process in April, before the agency filed its lawsuit.

The FTC complaint reportedly states “Amazon still requires five clicks on desktop and six on mobile for consumers to cancel from”

A 10-day non-jury trial is slated for February 2025.