FTC Accuses Amazon of Tricking Millions into Joining Prime
Last updated June 22, 2023
The Federal Trade Commission (FTC) sued Amazon on Wednesday, accusing the company of enrolling customers into its Prime program without their consent—and then making it difficult for them to cancel.
The FTC said Amazon “knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime” for many years. In its complaint, the commission accused the world’s largest online retailer of using “manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions.”
Those who tried to cancel often faced a process created by Amazon that was “knowingly complicated,” the FTC said. In fact, the primary purpose of its Prime cancellation process, the commission claimed, was to stop them from canceling.
Amazon’s leadership was aware of what was going on, and “slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line, the government said.
“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.
Amazon has more than 200 million Prime members who pay $139 a year or $14.99 a month to get faster shipping and other benefits, such as the Prime Video streaming service.
The government’s lawsuit asked the court to stop the allegedly illegal practices and order Amazon to pay a financial penalty.
Amazon called the government’s allegations “false on the facts and the law” and vowed to defend itself in court. The company said it has a “clear and simple” process for subscribing or canceling Prime subscriptions.
This is the FTC’s second case against Amazon this year. Last month, the commission charged the company with violating the Children’s Online Privacy Protection Act Rule (COPPA) by using its Alexa voice assistant to record and save children’s voices and ignoring parents’ requests to delete them. That lawsuit also alleged Amazon’s Alexa app illegally collected and saved children’s geolocation information. Amazon did not admit it broke the law, but it did agree to settle the case by paying a $25 million civil penalty, changing its business practices, and instituting strong privacy safeguards.
More Info: Amazon and Microsoft Charged with Violating Children's Privacy Law
What the Lawsuit Alleges Amazon Did
During the checkout process, customers are presented numerous opportunities to subscribe to Amazon Prime. In many cases, the option to purchase items on Amazon without subscribing to Prime was more difficult to locate, the complaint alleges. In some cases, the button presented to complete the transaction “did not clearly state that in choosing that option they were also agreeing to join Prime for a recurring subscription.”
Consumers who tried to cancel their Prime memberships were faced with “multiple steps to actually accomplish the task of canceling,” according to the complaint. Consumers had to first locate the cancellation flow, “which Amazon made difficult.” Once they located the cancellation flow, they were redirected to multiple pages that presented several offers to continue the subscription at a discounted price, to simply turn off the auto-renew feature, or to decide not to cancel. Only after clicking through these pages, the FTC said, could consumers finally cancel the service.
The FTC lawsuit accuses Amazon of using “similar manipulative design elements that trick consumers into signing up and thwart their cancellation attempts” with these other subscription services it operates: Audible (audiobooks and podcasts), Kindle Unlimited (eBooks and digital media), Amazon Music Unlimited (streaming music), and Subscribe & Save (regularly scheduled delivery of consumer goods).
The Commission also noted in its complaint that Amazon acted in “bad faith,” and tried to delay the agency’s investigation.
Targeting Dark Patterns
The FTC has been focused on dark patterns and other deliberately deceptive business practices for several years. In November 2022, the FTC settled a lawsuit with internet phone service provider Vonage for allegedly creating “significant cancellation hurdles” for customers who no longer wanted the service. Vonage agreed to settle the case by changing its business practices and refunding $100 million to customers harmed by its actions.
Sam Levine, director of the FTC’s Division of Consumer Protection, said he hopes this case “sends a strong message…that these practices won’t be profitable.”
In March, the FTC announced that it planned to update its rules about subscriptions and recurring payments by adding a provision requiring companies to provide a “click to cancel” option. This would eliminate the frequent hassles involved with ending unwanted subscription payments for everything from streaming services and cosmetics to gym memberships and pet products, the commission said.
In an interview about dark patterns on Checkbook’s Consumerpedia podcast, Levine said the commission would be aggressive in holding companies accountable if they “continue to use tricks and traps to prevent people from canceling their services, to trap them in services they don’t want, or trick them in a way that prevents them from canceling.”
He encouraged anyone who has trouble canceling a subscription or membership to file a complaint with the FTC.
More Info: FTC Rule Would Make it Easier to Cancel Unwanted Subscriptions
Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He has been protecting consumers for more than 40 years, having covered the consumer beat for CBS News, The Today Show, and NBCNews.com. You can also find him on Facebook, Twitter, and at ConsumerMan.com.