Amazon tricked consumers into buying Prime membership, alleges lawsuit

The US Federal Trade Commission (FTC) has filed a lawsuit against Amazon, accusing the tech giant of engaging in deceptive practices to enroll consumers into its paid subscription program, Amazon Prime, and making it challenging for them to cancel their subscriptions.

The FTC’s complaint, filed in Seattle where Amazon is headquartered, alleges that the company knowingly misled millions of consumers into unknowingly signing up for Amazon Prime through a secret internal project called “Iliad.”

The agency claims that Amazon utilized manipulative and coercive user-interface designs, known as “dark patterns,” to trick consumers into automatically renewing their Prime subscriptions.

According to the complaint, Amazon made it more difficult for consumers to purchase items on its platform without subscribing to Prime.

In some cases, consumers were presented with a transaction completion button that didn’t clearly indicate they would also be enrolled in Prime.

The FTC argues that Amazon’s actions violated the FTC Act and the Restore Online Shoppers’ Confidence Act.

The lawsuit signifies the first legal action taken by the FTC against Amazon since Chair Lina Khan assumed her role in 2021.

Khan, a former antitrust scholar, has been expected to adopt a tougher stance on regulating tech firms that have experienced significant growth with minimal regulation.

The FTC asserts that one of Amazon’s primary business goals, along with Prime, is to increase its subscriber numbers. This move by the agency has been praised by antitrust advocates and big tech watchdogs, who call for more stringent action against the e-commerce giant.

Prime, launched in 2005, boasts over 200 million members worldwide who pay either $139 annually or $14.99 monthly for benefits such as faster shipping, free delivery, returns, and access to Prime Video streaming service.

In the first quarter of this year, Amazon reported $9.6 billion in revenue from subscriptions, a 17% increase from the same period last year.

The FTC’s lawsuit, although heavily redacted, contains multiple allegations that support its accusations against Amazon. Additionally, the agency accuses Amazon of attempting to obstruct its investigation into Prime on several occasions.

In response to the lawsuit, Amazon disputed the FTC’s claims, stating that the agency filed the lawsuit without prior notification to the company.

Amazon spokesperson Heather Layman expressed disappointment over the absence of customary engagement with commissioners before initiating legal action.

Layman emphasized that Amazon strives to provide a clear and simple experience for customers to both sign up for and cancel their Prime memberships.

This legal action adds to the heightened regulatory scrutiny Amazon has faced in recent years as it expanded its dominance in e-commerce and ventured into other sectors such as groceries and healthcare.

The FTC’s lawsuit follows a recent victory against Amazon in which the company agreed to pay a $25 million civil penalty for violating a child privacy law by storing voice and location data from children using its popular Alexa voice assistant. Amazon also agreed to pay $5.8 million in customer refunds for alleged privacy violations related to its doorbell camera Ring.

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