American regulator sues Amazon, alleging ‘deceptive’ Prime sign-up and cancellation process for millions of customers
Amazon has received another piece of bad news this week after the US antitrust regulator announced it is suing the e-commerce giant.
The Federal Trace Commission (FTC) lawsuit charges that Amazon “has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime. Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions.”
This comes after it emerged this week that the US Senate Committee on Health, Education, Labor and Pensions (HELP) has launched an investigation into Amazon’s workplace safety practices, which is being lead by noted Amazon critic, US Senator Bernie Sanders (who also happens to be the chair of HELP).
But the FTC complaint against Amazon over its Prime subscription process has been expected for a while now.
Indeed in August 2022 Amazon had accused the FTC of harassing its senior leadership, namely Jeff Bezos,and Andy Jassy, by asking them to testify in its investigation of the company’s Prime subscription service.
News of the FTC probe of Amazon Prime had been revealed in a FTC filing dated 5 August 2022, that was made public a couple of weeks afterwards.
However the FTC probe apparently began in March 2021.
Amazon in its complaint had accused FTC staff of taking “unusual and perplexing” measures in its investigation.
It also alleged that “unexplained pressure” has been placed on FTC staff to “complete the investigation hastily, by an arbitrarily chosen deadline.”
And Amazon blamed FTC staff behaviour that “has exacerbated the breakdown in this investigation, with the most recent incident being the most egregious.”
Amazon had alleged that FTC staff attempted to restrict, contrary to law and FTC practice, counsel’s ability to jointly represent Amazon and the individual Civil Investigative Demand (CID) recipients.
FTC staff even reportedly demanded that counsel leave a hearing for the first individual witness “for failing to abide by this improper restriction.”
Amazon had said last August that for more than a year it had “worked diligently and cooperatively” with FTC staff to provide relevant information of the agency’s probe of Amazon Prime sign-up and cancellation processes.
But now the FTC has decided to file its lawsuit in US District Court for the Western District of Washington, alleging Amazon tricked customers into signing up for its Prime subscription progra.
The FTC also alleges that Amazon knowingly complicated the cancellation process for Prime subscribers who sought to end their membership.
“The primary purpose of its Prime cancellation process was not to enable subscribers to cancel, but to stop them,” the FTC alleges. “Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line.”
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” said FTC Chair Lina M. Khan. “These manipulative tactics harm consumers and law-abiding businesses alike.”
“The FTC will continue to vigorously protect Americans from ‘dark patterns’ and other unfair or deceptive practices in digital markets,” said Khan.
FTC said that for now, it’s complaint is significantly redacted, though the FTC has told the Court it does not find the need for ongoing secrecy compelling.
Nevertheless, the FTC complaint apparently contains a number of allegations related to the company’s decision not to make changes to prevent nonconsensual enrollment in Prime and the difficulties consumers faced in attempting to unsubscribe from the service.
The FTC said that its lawsuit specifically charges that Amazon used so-called “dark patterns” to cause consumers to enroll in Prime without their consent, in violation of the FTC Act, and the Restore Online Shoppers’ Confidence Act.
And the FTC charges that Amazon allegedly put in place a cancellation process designed to deter consumers from successfully unsubscribing from Prime.
The regulator’s complaint alleged that consumers who attempted to cancel Prime were faced with multiple steps to actually accomplish the task of cancelling. Consumers had to first locate the cancellation flow, which Amazon allegedly made difficult.
Once they located the cancellation flow, they were redirected to multiple pages that presented several offers to continue the subscription at a discounted price, to simply turn off the auto-renew feature, or to decide not to cancel.
Only after clicking through these pages could consumers finally cancel the service, the DTC alleged.
The FTC complaint also alleged that Amazon was aware of consumers being nonconsensually enrolled and the complex and confusing process to cancel Prime that the company’s executives failed to take any meaningful steps to address the issues until they were aware of the FTC investigation.
In the complaint, the FTC also alleges that Amazon attempted to delay and hinder the Commission’s investigation in multiple instances.
The complaint marks the third lawsuit the FTC has filed against Amazon in the last month.
Amazon in late May agreed to pay the agency more than $30 million to settle cases alleging privacy lapses in its Alexa and Ring units. The company said it disagreed with the FTC’s claims but that it settled in order to move on from the matter.
Prime generates billions of dollars for Amazon, and it gives users speedy deliveries and access to its streaming TV and music content.
In October 2019, the UK advertising watchdog, the ASA, ruled that Amazon had used a misleading payment page to get users to sign up for its Prime subscription service.