"Prime Subscription and Cancellation Deception" US FTC Sues Amazon

The world's largest e-commerce company, Amazon, has been sued again by the U.S. Federal Trade Commission (FTC).

On the 21st (local time), the FTC confirmed the lawsuit, stating that Amazon violated the FTC Act and the Restore Online Shoppers' Confidence Act by deceiving customers into enrolling in its paid membership program, Prime, without their consent and making the cancellation process complicated.

[Image source=AP Yonhap News]

Amazon Prime is a membership program that offers benefits such as free shipping and streaming content for an annual fee of $139. Launched in 2005, it has become a representative popular subscription service with over 200 million members worldwide. FTC Chair Lina Khan stated in a press release, "Amazon not only frustrated users by enrolling them in Prime without their consent but also caused them to incur significant costs."

The FTC determined that Amazon used a "manipulative, coercive, or deceptive so-called 'dark pattern' interface." Specifically, Amazon made it difficult for consumers to purchase products on its site without subscribing to Prime. Additionally, the button to complete the transaction did not clearly indicate that clicking it meant agreeing to a recurring Prime subscription.

While it was easy to sign up for Prime with just a click or two, the cancellation process was hard to find. The FTC pointed out that Amazon complicated the cancellation procedure to prevent consumers from unsubscribing, as cancelations would negatively impact Amazon's revenue. The FTC criticized, "Amazon made it easy to join Prime with one or two clicks, but when canceling, it created a cancellation process that spans 4 pages, 6 clicks, and 15 options, likened to the 'Iliad flow' referencing Homer's epic about the long and arduous Trojan War."

The FTC has been investigating Amazon Prime's enrollment and cancellation procedures since March 2021. Last year, tensions escalated when the FTC demanded testimony from Jeff Bezos, Amazon's founder, and Andy Jassy, CEO. The Wall Street Journal (WSJ) also reported earlier this year, citing sources, that the FTC might file an antitrust lawsuit against Amazon within a few months.

Amazon previously settled last month for over $30 million in fines related to two privacy violation lawsuits filed by the FTC and the Department of Justice. These include a lawsuit filed by the FTC alleging that Ring, a smart home company acquired in 2018, failed to take measures to protect users' privacy, and a lawsuit filed by the Department of Justice on behalf of the FTC claiming that Alexa-enabled speakers collected information about children under 13 without parental consent.