Amazon was sued by the Federal Trade Commission on Wednesday for what it called a years-long attempt to enroll consumers in the Prime program without authorization and make it difficult for them to cancel their subscriptions.
In a complaint filed in U.S. District Court for the Western District of Washington, the agency accused Amazon of using deceptive designs, known as “dark patterns,” to mislead consumers into enrolling in the program.
It said the option to purchase items on Amazon without subscribing to Prime was more difficult in many cases. It also said consumers were sometimes presented with a button to complete their transactions – which didn’t clearly state that it would also enroll them in Prime.
Internally, Amazon called the process “Iliad,” a reference to the ancient Greek poem about the prolonged siege of Troy during the Trojan War.
Company executives delayed or rejected changes that made canceling the subscription easier, the complaint said. It argued that those patterns violated the FTC law and another law, the Restore Online Shoppers’ Confidence Act.
Launched in 2005, Prime has more than 200 million members worldwide who pay $139 a year or $14.99 a month for faster shipping and other benefits such as free delivery, returns and the Prime Video streaming service. In the first three months of this year, Amazon reported that it earned $9.6 billion from subscriptions, up 17% from the same period last year.
In a press release announcing the lawsuit, the FTC said that while its complaint has been redacted significantly, it contains “a number of allegations” that support its allegations against Amazon. It also accused the company of trying in several cases to obstruct the agency’s investigation into Prime, which began in 2021.
“Amazon tricked and tricked people into recurring subscriptions without their consent, which not only frustrated users but also cost them a lot of money,” FTC Chairman Lina Khan said in a prepared statement. “These manipulative tactics harm both consumers and law-abiding businesses.”
Over the past two years, the agency has stepped up its enforcement against deceptive sign-up and cancellation tactics that could manipulate consumers into buying products or services they don’t want.
In December, it said Epic Games Inc., the maker of the hit video game Fortnite, would pay $245 million in customer refunds for deceptive payment methods. In November, telecom company Vonage settled a similar case for $100 million.
The lawsuit also comes as Amazon faces increased regulatory scrutiny as it looks to expand its e-commerce dominance and dip its toes into other markets, including groceries and healthcare.
Some anti-monopoly groups celebrated Wednesday shortly after the FTC’s announcement of the lawsuit. Amazon did not immediately respond to a request for comment on Wednesday, but NetChoice, a technology lobby group that counts the online retailer as one of its members, released a statement calling the lawsuit absurd.
“The complaint is that Amazon is encouraging people to use Amazon Prime — this is like going after Kroger for promoting its rewards program or Costco for its membership club,” said Carl Szabo, the group’s vice president and general counsel, in a statement. “It is abundantly clear that the FTC is a runaway agency that needs more oversight. Congress needs strong oversight to rein in the FTC by cutting funding and investigating its ethical flaws and abuses of power.”
The industry group also pointed to Khan’s previous criticism of Amazon, accusing her of using the lawsuit “to attack US companies she doesn’t like”.
Khan, 34, burst onto the antitrust scene in 2017 with her massive scholarly work as a Yale law student, “Amazon’s Antitrust Paradox.”
In 2021, Amazon unsuccessfully asked that it withdraw itself from separate antitrust investigations into its activities, arguing that its public criticism of the company’s market power before entering government made it impossible for it to be impartial.
The US and Amazon have traded barbs for the investigation.
Last year, Amazon accused the FTC of harassing its executives, including founder Jeff Bezos, when the agency tried to get the company’s top executives to testify as part of its investigation.
The tech giant has also faced other lawsuits accusing the Prime cancellation process of being too complicated. While under FTC scrutiny, the company in March gave consumers instructions on how to cancel their Prime memberships in a blog post.
The lawsuit follows another Amazon-related agency victory a few weeks ago.
Earlier this month, Amazon agreed to pay a $25 million civil fine to defy allegations that it violated a child privacy law for storing children’s voice and location data recorded by the popular Alexa voice assistant.
It also agreed to pay $5.8 million in customer refunds for alleged privacy violations related to its Ring doorbell camera.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – Associated Press)
