FTC Sues Amazon Over 'Manipulative’ Tactics Used for Prime Enrollment
On the same day that Amazon released details for its Prime Day 2023 event, the Federal Trade Commission filed a lawsuit against the online retail giant that alleges the company uses “manipulative” tactics to enroll millions of consumers into its Prime membership.
In a complaint filed June 21, the FTC charged that Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime. Specifically, Amazon used manipulative, coercive or deceptive user-interface designs known as “dark patterns” to trick consumers into enrolling in Prime and automatically renewing their subscriptions. Enrolling consumers in Prime without their consent is a violation of the FTC Act and the Restore Online Shoppers’ Confidence Act.
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Amazon also allegedly complicated the cancellation process for Prime subscribers who wanted to end their membership. FTC claimed that the primary purpose of the company's Prime cancellation process was not to enable subscribers to cancel, but to stop them. The agency said that Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime, because those changes adversely affected Amazon’s bottom line.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users, but also costing them significant money,” said FTC Chair Lina M. Khan. “These manipulative tactics harm consumers and law-abiding businesses alike. The FTC will continue to vigorously protect Americans from ‘dark patterns’ and other unfair or deceptive practices in digital markets.”
Progressive Grocer reached out to Amazon for comment. A company spokesperson provided the following statement: “The FTC’s claims are false on the facts and the law. The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership. As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the facts becoming clear as this case plays out. 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. While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court.”
As reported by CNBC, the FTC had been investigating signup and cancellation processes for Amazon’s Prime program since March 2021. Tensions flared between Amazon and the FTC when the agency sought to have CEO Andy Jassy and founder Jeff Bezos testify on the company’s Prime practices. Amazon argued that the request would be unduly burdensome, a claim that the FTC rejected.
Prime Day was created eight years ago. In 2022, Prime members purchased more than 300 million items worldwide, making last year’s two-day promotion the biggest Prime Day event in Amazon’s history. Prime Day 2023 will be held on July 11-12.
FTC’s complaint was filed in the U.S. District Court for the Western District of Washington.
For now, the complaint is significantly redacted, though the FTC has told the court it doesn’t find the need for ongoing secrecy compelling.
Seattle-based Amazon is No. 2 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. PG also named the company one of its Retailers of the Century.
