FTC sues Amazon, alleging it tricked consumers into signing up for Prime
CNN
By Brian Fung, CNN
(CNN) — The Federal Trade Commission sued Amazon on Wednesday, alleging that the e-commerce giant has tricked millions of consumers into signing up for its Prime subscription service through deceptive user interface designs.
The complaint filed in the US District Court for the Western District of Washington also takes aim at Amazon for allegedly trying to keep users subscribed who wished to cancel their memberships.
“Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions,” the FTC complaint said. It added that Amazon deliberately made it much harder to cancel subscriptions than to enroll in Prime, alleging that the company created a “labyrinthine” cancellation process intended to distract or deter consumers from following through on their intent.
The lawsuit marks the FTC’s most significant step yet against business practices the agency says harms consumers by either luring them in or keeping them trapped using psychological gimmicks. It represents the culmination of a months-long investigation into Amazon’s Prime practices that involved testimony from company founder Jeff Bezos and CEO Andy Jassy.
It also hits on a key area of Amazon’s business. The company topped 200 million paid Prime subscribers in 2021, fueled in part by significant investments in original content and faster shipping. With Prime, Amazon is able to generate billions in revenue from subscriptions and incentivize customers to spend more time and money on its platforms.
In a statement Wednesday, Amazon called the FTC’s claims “false on the facts and the law” and said it did not receive notice before the complaint was filed.
“We also find it concerning that the FTC announced this lawsuit without notice to us, in the midst of our discussions with FTC staff members to ensure they understand the facts, context, and legal issues, and before we were able to have a dialog with the Commissioners themselves before they filed a lawsuit,” the company said in the statement. “While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court.”
According to Wednesday’s complaint, Amazon took some steps in April, in response to FTC pressure, to simplify users’ ability to cancel their Prime subscriptions but before then had denied customers the ability to easily cancel their Prime subscriptions online.
Since 2016, the company allegedly maintained a lengthy, multi-step cancellation process it internally referred to as “Iliad Flow,” named after “Homer’s epic about the long, arduous Trojan War,” the FTC complaint said. Other than contacting customer service, Amazon offered no alternative to consumers wishing to cancel apart from going through the Iliad process, the FTC said.
The FTC alleged that going through the Iliad Flow required customers to “navigate a four-page, six-click, fifteen-option cancellation process” that contained numerous off-ramps — including warnings about missing out on benefits, promotional discounts and offers on deals — intended to derail the customer.
Meanwhile, Amazon made it easy to sign up for Prime in just two clicks, the FTC said, and often buried specifics about recurring bills in fine print, the FTC alleged.
Wednesday’s complaint against Amazon marks the first major lawsuit against the company by FTC Chair Lina Khan, who helped kickstart a wider debate on tech platforms’ impact on competition with an influential journal article in 2017 highlighting potential antitrust issues involving Amazon.
Last month, Amazon agreed to pay more than $30 million to settle two FTC privacy complaints surrounding its Alexa and Ring products.
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