US FTC Sues Amazon for Misleading Millions of Consumers into Unknowingly Enrolling in Amazon Prime
Key Highlights :
The U.S. Federal Trade Commission (FTC) filed a lawsuit against Amazon.com Inc (AMZN.O) on Wednesday, accusing the online retailer of enrolling millions of consumers into its paid subscription Amazon Prime service without their consent and making it difficult for them to cancel. According to the FTC, Amazon used “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions.” Amazon Prime offers fast, free shipping on millions of items, discounts, and access to movies, music and television series, as well as other benefits. Prime members in the United States pay $139 per year and drive much of Amazon’s sales volume. Prime has more than 200 million members worldwide.
The FTC said Amazon generates $25 billion in revenue from Prime subscriptions annually and that “one of Amazon’s primary business goals - and the primary business goal of Prime - is increasing subscriber numbers.” The lawsuit said that under substantial pressure from the FTC, Amazon changed its cancellation process in April but that “violations are ongoing.” The agency is seeking civil penalties and a permanent injunction to prevent future violations. Amazon’s shares were down 0.9% in mid-morning trading. The company did not immediately respond to a request for comment.
The FTC has been investigating sign-up and cancellation processes for the Prime program since March 2021. “Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in a statement. Consumers who attempted to cancel Prime were faced with multiple steps to actually accomplish the task of cancelling, according to the complaint. The FTC complaint said Amazon used the term “Iliad Flow” to describe the process, referencing Homer’s epic poem about the lengthy Trojan war.
The FTC’s lawsuit against Amazon highlights the importance of consumer protection and the need for companies to be transparent and honest about their services and subscription plans. Consumers should always be aware of the terms of service and cancellation policies of any subscription service. It is also important to be aware of how companies are using dark patterns to manipulate consumers into signing up for services they may not be aware of or do not want. Companies should also ensure that their customers have a clear and easy way to cancel their subscriptions.
