The United States Federal Trade Commission (FTC) has filed a lawsuit against Amazon, accusing the e-commerce giant of misleading customers into signing up for automatically renewing Prime subscriptions and creating barriers to cancelling the service.
The FTC alleges that Amazon utilized manipulative website designs to coerce customers into enrolling in Prime and made it challenging for them to opt out.
Amazon denies the charges, asserting its falsehood and stating its commitment to transparency.
With over 200 million global subscribers, Amazon Prime offers various benefits, such as expedited shipping and streaming services at a cost of $139 per year in the US and £95 per year in the UK.
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Allegations of Deceptive Practices
The FTC claims that Amazon employed website designs intended to guide customers into unwittingly agreeing to enroll in Prime subscriptions with automatic renewal. The agency alleges that Amazon deliberately obstructed the cancellation process to discourage users from opting out, thereby protecting its financial interests.
The complaint, filed in a federal court in Seattle, asserts that Amazon employed a complex “four-page, six-click, fifteen option” process, internally known as “Iliad,” likening it to the arduous Trojan War from Greek mythology. Although Amazon modified the cancellation process prior to the lawsuit, the FTC maintains that the company violated laws aimed at safeguarding consumer rights.
FTC’s Call for Action
FTC Chair Lina Khan has condemned Amazon’s practices, accusing the company of deceiving and entrapping customers into recurring subscriptions without their consent. Khan argues that these tactics not only frustrated users but also led to significant financial losses.
As a result, the FTC is seeking a court order to compel Amazon to change its practices and request unspecified financial penalties.
Amazon’s Response
Amazon asserts that it was already engaged in discussions with the FTC regarding these issues when the lawsuit was unexpectedly filed. The company refutes the allegations, stating that Prime is well-liked by customers, and they have strived to ensure transparency and simplicity in both the sign-up and cancellation processes.
FTC’s Concerns Over “Dark Patterns”
The FTC has consistently cautioned online businesses against employing “dark patterns” to manipulate shoppers. Since 2021, the FTC has been investigating Amazon’s Prime program, with the company allegedly attempting to delay the probe by delaying document submissions.
Evelyn Mitchell-Wolf, a senior analyst at Insider Intelligence, believes the FTC is using this lawsuit as an opportunity to set an example and discourage other companies from employing similar tactics.
FTC’s Vigilance in Online Shopping
FTC Chair Lina Khan, appointed by President Joe Biden, has been a vocal critic of Amazon and has pledged to take a more aggressive stance in regulating online shopping and the power wielded by major tech companies.
This lawsuit marks the third recent action taken by the FTC against Amazon. Previously, Amazon settled charges of violating child privacy laws by paying a $25 million fine and resolved claims related to Ring’s privacy breaches with a $5.8 million payment.
The FTC’s lawsuit against Amazon highlights the allegations of deceptive practices of using manipulative website designs and complicated cancellation procedures in Prime subscriptions.
As the case unfolds, the court will determine the outcome, potentially forcing Amazon to change its practices and imposing financial penalties.
This legal action serves as a reminder that consumer protection remains a top priority for regulatory authorities, signalling a more proactive approach to policing the practices of major online retailers and tech giants.
