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F.T.C. Sues Amazon for Inducing Users to Subscribe to Prime

ByTeam BB

Jun 21, 2023


The Federal Trade Commission on Wednesday sued Amazon for illegally inducing consumers to sign up for its Prime service and then hindering them from canceling the subscription, the most aggressive action against the company to date by the agency’s chair, Lina Khan.

The lawsuit, filed in U.S. District Court for the Western District of Washington, argues that Amazon had used design tactics on its website known as “dark patterns” to nudge people into subscribing to Prime, the F.T.C. said in a release. And when consumers wanted to cancel, they had to go through a byzantine process to do so.

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” Ms. Khan said in a statement.

Amazon didn’t immediately respond to a request for comment.

The lawsuit was the first time that the F.T.C. has taken Amazon to court under Ms. Khan, who rose to fame with a viral critique of the company and who is ramping up scrutiny of the e-commerce giant. Ms. Khan has said the power that big tech companies have over online commerce requires regulators to be far more aggressive and has begun taking actions against them.

Under Ms. Khan, the F.T.C. continued a lawsuit against Meta, arguing it cut off nascent competitors by buying Instagram and WhatsApp, and sued to block Microsoft’s blockbuster $69 billion deal for the video game publisher Activision Blizzard.

Ms. Khan has yet to bring the kind of sweeping antitrust case against Amazon that the company’s critics demand. The F.T.C.’s antitrust bureau has been investigating Amazon’s practices for years and observers are closely watching how she will move forward with their findings.

The lawsuit is part of a larger effort by regulators to limit the power of tech giants including Amazon, Apple, Google, Microsoft and Meta, Facebook’s parent company. The Department of Justice has in recent years filed multiple antitrust cases against Google.

Amazon has recently settled cases with the F.T.C. that began before Ms. Khan’s tenure. The company agreed to pay $25 million last month to settle F.T.C. claims that Amazon’s Alexa home assistant devices had illegally collected children’s data. The agency also settled another privacy case with Amazon’s Ring home security subsidiary.

Amazon Prime has for years attracted subscribers with promises of free expedited shipping, access to a streaming video library and other benefits. In 2021, the company said that it had more than 200 million members in the program, which costs $139 a year. Customers last year spent $35 billion on Amazon subscriptions, primarily Prime memberships, according to the company’s financial disclosures.

On Wednesday, the F.T.C. said that Amazon had made it particularly difficult to purchase a product in its store without also subscribing to Prime while checking out. The agency said Amazon made it hard for consumers to find the page that allowed them to cancel the service. Once they did find it, Amazon bombarded them with offers intended to make them change their mind.

The lawsuit follows years of media and activist attention on how hard it is to cancel Prime. In a 2021 complaint to the District of Columbia attorney general, the Electronic Privacy Information Center, an advocacy group, said that Amazon had used manipulative designs to “frustrate the intentions of users who intend to cancel their Amazon Prime subscriptions.”

The F.T.C. has recently pledged to crack down on designs meant to nudge consumers or confound their efforts to cancel a service.

“While dark patterns may manipulate consumers in stealth, these practices are squarely on the F.T.C.’s radar,” the agency said in a 2022 report.

Critics consider Prime central to Amazon’s dominance because it keeps customers inside the company’s retail store by offering them other perks, like access to Amazon streaming exclusives such as “Tom Clancy’s Jack Ryan” and “The Lord of the Rings: The Rings of Power.”

Amazon has said that Prime provides benefits for consumers. When the company lobbied in recent years against reforms to antitrust laws focused on the tech giants, it regularly told lawmakers and the media that the changes would hobble Prime.



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