FTC Sues Amazon, Alleging it Tricked Consumers into Signing Up For Prime
The Federal Trade Commission (FTC) has filed a lawsuit against Amazon, accusing the company of using deceptive user interface designs to trick consumers into signing up for its Prime subscription service and making it difficult for them to cancel their memberships.
The complaint alleges that Amazon employed manipulative and coercive user-interface designs known as “dark patterns” to enroll consumers in automatically-renewing Prime subscriptions while intentionally creating a complex and labyrinthine cancellation process to discourage users from canceling.
This lawsuit represents a significant step by the FTC to address practices that harm consumers by using psychological tactics to either attract or retain them. It follows a thorough investigation that involved testimonies from Amazon’s founder, Jeff Bezos, and CEO, Andy Jassy.
The lawsuit directly impacts a crucial aspect of Amazon’s business, as the company has surpassed 200 million paid Prime subscribers and relies on subscriptions to generate substantial revenue and encourage increased spending on its platforms through features like faster shipping and original content.
Amazon responded to the FTC’s claims, calling them false and expressing concern about the lack of prior notice before the complaint was filed. The company stated that it had been engaging in discussions with FTC staff members to provide context and address the legal issues before the lawsuit was announced.
Although Amazon made some efforts in April to simplify the cancellation process following FTC pressure, the complaint alleges that the company had previously denied customers an easy online method to cancel their Prime subscriptions.
According to the FTC, Amazon implemented a lengthy cancellation process referred to as “Iliad Flow” since 2016, requiring customers to navigate a four-page, six-click, fifteen-option process designed to deter them from canceling by presenting various warnings and offers.
In contrast, the FTC claims that Amazon made it simple for users to sign up for Prime with just two clicks, while burying details about recurring bills in fine print.
This lawsuit against Amazon is significant because it is the first major legal action taken by FTC Chair Lina Khan, who has been instrumental in raising concerns about competition issues involving tech platforms like Amazon since her influential journal article in 2017.
In a recent settlement, Amazon agreed to pay over $30 million to resolve two FTC privacy complaints related to its Alexa and Ring products.
