“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 Khan in a news release. “These manipulative tactics harm consumers and law-abiding businesses alike.”
Amazon increased the price of Prime in 2022 to $139 a year or $14.99 a month.
The suit sets up a legal battle. Amazon spokeswoman Heather Layman called the FTC’s claims “false on the facts and the law.”
The company makes it “clear and simple” to sign up for and cancel Prime, Layman said. The FTC did not notify the company the suit was coming, even as company staff engaged with the regulators, she said.
“While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court,” Layman said.
The FTC’s broadside against Amazon is indicative of a broader agency strategy to use existing consumer protection and competition laws to address the power of Big Tech. The agency over the last two years has hosted workshops and reports on “dark patterns,” signaling that it intends to be more aggressive in penalizing companies that use sophisticated design techniques to dupe customers into buying their products or giving up key privacy protections.
The lawsuit also underscores the threat that Khan — who rose to fame for an academic paper called “Amazon’s Antitrust Paradox” — poses to Amazon’s sweeping business interests.
Khan’s FTC and the e-commerce giant are increasingly on a collision course. Last month, the FTC settled two lawsuits against Amazon, one regarding its Alexa speaker recording children and another regarding customer privacy and its Ring home surveillance system.
Amazon’s critics have been calling on the FTC to bring a broad antitrust lawsuit against the company. After years of investigation, the complaint is expected to be filed this year, according to a person familiar with the matter, who spoke on the condition of anonymity to discuss the sensitive case.
Khan’s paper argued that the e-commerce behemoth’s operations should be legally reevaluated. In 2021, Amazon tried and failed to have Khan recused from regulating the company.
The FTC has also sued internet phone company Vonage, video gamemaker Epic and Credit Karma over their alleged use of “dark patterns.” The Epic suit settled for $245 million in December; the Vonage case settled for $100 million.
Amazon founder Jeff Bezos owns The Washington Post. Interim CEO Patty Stonesifer sits on Amazon’s board. Amazon did not immediately respond to a request for comment.
According to the FTC’s complaint, Amazon “considerably revamped” its cancellation process before the suit was filed.
“However, before that time, the primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them,” the complaint alleges. “Fittingly, Amazon named that process ‘Iliad,’ which refers to Homer’s epic about the long, arduous Trojan War.”
The FTC’s lawsuit alleges Amazon tricks customers into signing up for Prime “by presenting asymmetric choices that make it easier to enroll in Prime than not” during the checkout process. When non-Prime customers go to buy something, Amazon “interrupts the consumers’ online shopping experience by presenting them with a prominent button to enroll in Prime and a comparatively inconspicuous link to decline,” the suit says.
It also says Amazon “does not adequately disclose the price of the monthly auto-renewal feature of Prime,” and that design elements of the enrollment process make it hard for customers to see that they will be automatically charged for Prime after signing up for a free trial.
The complaint alleges that these design practices are not limited to Amazon’s Prime business, and that the company has used similar techniques to attract and trap subscribers for its Audible audiobook service, Kindle Unlimited digital book subscription and Amazon Music.
The FTC also alleges that the company acted in bad faith throughout its investigation, taking steps to delay the probe.
