The consumer protection agency filed a lawsuit claiming that Amazon’s website manipulates users into enrolling in Prime, where subscribers pay $139 a year for privileges like speedy free delivery, video streaming and access to 100 million songs. The cancellation process for Prime is also difficult to find and requires multiple steps, the FTC alleged
Washington:
The U.S. Federal Trade Commission on Wednesday accused Amazon.com of enrolling millions of consumers into its paid subscription Amazon Prime service without their consent and making it hard for them to cancel, the agency’s latest action against the ecommerce giant in recent weeks.
The FTC sued Amazon in federal court in Seattle, alleging that the company has “knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime.” In a statement, Amazon called the FTC’s claims “false on the facts and the law.”
Amazon has used “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions,” the FTC said as it seeks civil penalties and a permanent injunction to prevent future violations.
The lawsuit is one of several actions taken by President Joe Biden’s administration intended to rein in the outsized market power of Big Tech firms as it tries to increase competition to protect consumers.
The FTC said Amazon Prime is the world’s largest subscription program, generating $25 billion in revenue annually. It offers fast, free shipping on millions of items, various discounts and access to movies, music and television series, as well as other benefits.
The consumer protection agency filed a lawsuit claiming that Amazon’s website manipulates users into enrolling in Prime, where subscribers pay $139 a year for privileges like speedy free delivery, video streaming and access to 100 million songs. The cancellation process for Prime is also difficult to find and requires multiple steps, the FTC alleged.
The agency said Amazon referred to the process internally as the Iliad, after Homer’s lengthy epic poem. In its complaint, the FTC said consumers must click through five pages on the desktop web store or six on the mobile app to cancel Prime. It also claimed Amazon failed to turn over information sought by investigators, taking more than 18-months to produce materials the FTC sought.
The FTC said Amazon’s tactics violate a 2010 consumer protection law designed to protect online shoppers.
About 167 million Amazon shoppers had Prime memberships as of March, unchanged from a year earlier, according to Consumer Intelligence Research Partners.
“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.
The suit is the third the FTC has filed against Amazon in the past month. The company agreed to pay $30.8 million to settle allegations that it failed to delete data about kids collected by its Alexa speakers and that its Ring doorbells and cameras illegally spied on users. Amazon said it disagreed with the FTC’s allegations but agreed to settlements to resolve the cases.
Prime members in the United States pay $139 per year and drive much of Amazon’s sales volume. Prime, which has more than 200 million members worldwide, is crucial to Amazon’s other businesses including its streaming service Prime Video and its grocery delivery service.
In its statement, Amazon said, “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.”
Bloomberg