The US Federal Trade Commission (FTC) has filed a lawsuit against Amazon, accusing the company of enrolling millions of consumers into its paid subscription service, Amazon Prime, without their consent and making it challenging for them to cancel.
The FTC alleges that Amazon has used manipulative and deceptive user interface designs, known as “dark patterns,” to trick consumers into unknowingly signing up for and renewing Prime subscriptions. The agency is seeking civil penalties and a permanent injunction to prevent further violations.
Amazon Prime is the largest subscription program globally, generating an annual revenue of $25 billion. It offers various benefits, including fast and free shipping, discounts, and access to entertainment content. Prime members pay $139 per year in the United States and play a significant role in driving Amazon’s sales volume.
Amazon has refuted the FTC’s claims, calling them false on both the facts and the law. The company asserts that it makes the sign-up and cancellation processes clear and straightforward for customers.
Amazon expressed concern that the lawsuit was announced without prior notice, while discussions with FTC staff members were ongoing.
The FTC’s lawsuit follows a series of actions by the Biden administration aimed at curbing the market power of Big Tech companies to promote competition and protect consumers. Amazon’s cancellation process has been under investigation by the FTC since March 2021, with the complaint alleging that the company deliberately obstructed the investigation by providing inadequate responses to document requests.
While the FTC’s action against Amazon highlights the company’s market power, experts note that making it difficult to cancel subscriptions is not uncommon among companies.
However, Amazon’s size and influence may work against it in this case, as the FTC can easily demonstrate harm to consumers if their ability to cancel Prime memberships is impeded.
This lawsuit against Amazon is part of a broader global effort to address the influence of big tech companies, including Amazon, Apple, and Meta (formerly Facebook).
It is worth noting that other retailers and subscription services also create hurdles for ending memberships, according to Tom Forte, a managing director at D.A. Davidson Companies.