Rosalind Evans
On Wednesday, Amazon found itself in the crosshairs of a lawsuit filed by the Federal Trade Commission (FTC), accusing the company of secretly enlisting consumers into its Prime program and making it exceedingly challenging to revoke their subscriptions.
The suit, filed in the U.S. District Court for the Western District of Washington, alleges that Amazon employed ‘dark patterns,’ a deceptive design mechanism, to manipulate consumers into joining the program. The complaint further stated that, in many instances, the option to shop on Amazon without a Prime subscription was obscured. Customers were often presented with transaction completion buttons that failed to explicitly state that the action would also result in Prime membership enrollment.
Inside Amazon, this covert enrollment process was known as the “Iliad,” an homage to the extensive Trojan war portrayed in the ancient Greek poem.
The suit asserts that company executives often stalled or rejected alterations that could simplify the subscription cancellation process. The FTC maintains that these practices contravene the FTC Act and the Restore Online Shoppers’ Confidence Act.
Prime, initiated in 2005, currently boasts over 200 million global members who pay an annual $139 or $14.99 monthly for expedited shipping, free delivery and returns, and access to the Prime Video streaming service. For the first quarter of this year alone, Amazon reported a 17% increase from last year, making a hefty $9.6 billion from subscriptions.
In a news release announcing the lawsuit, the FTC clarified that although its complaint was significantly redacted, it contained multiple allegations substantiating its claims against Amazon. The agency also accused Amazon of numerous attempts to obstruct its investigation into Prime, initiated in 2021.
In a prepared statement, Khan accused Amazon of ensnaring consumers into recurring subscriptions without explicit consent, causing inconvenience and significant financial implications. “These underhand tactics harm both consumers and law-abiding businesses,” Khan stated.
Several anti-monopoly groups lauded the lawsuit following the FTC’s announcement.
Previously, Amazon has faced similar lawsuits alleging the undue complexity of its Prime cancellation process. Amid this scrutiny, the company published instructions on cancelling Prime memberships via a blog post in March but did not comment on the lawsuit on Wednesday.
As Amazon extends its reach into other sectors, such as groceries and healthcare, regulatory scrutiny of the company has amplified.
This investigation has escalated tensions between Amazon and the U.S. government over the years. Last year, Amazon claimed the FTC had harassed its executives, including founder Jeff Bezos, to secure their testimonies.
In 2021, Amazon unsuccessfully petitioned for Khan’s recusal from separate antitrust investigations into its practices, contending her previous public criticisms of the company preclude impartiality.
This lawsuit comes on the heels of another recent FTC victory involving Amazon. Earlier this month, Amazon conceded to paying a $25 million civil penalty to settle allegations of child privacy law violations related to its popular Alexa voice assistant. It also agreed to pay $5.8 million in customer refunds for purported privacy infringements associated with its doorbell camera Ring.
These recent lawsuits and allegations indicate the increasing scrutiny that large tech companies like Amazon face regarding their business practices. As Amazon expands its market footprint, regulators closely monitor its operations, especially regarding data privacy and consumer protection issues. This recent lawsuit and the investigations that have ensued remind companies that they must maintain transparency and fairness in their practices. Despite the controversy, Amazon’s global influence continues to grow, raising questions about the balance between consumer protection and business innovation.
