FTC sues Amazon over Prime sign-up and cancellation process
FTC Sues Amazon, Alleging Deception and Sabotage
The Federal Trade Commission (FTC) has filed a lawsuit against e-commerce giant Amazon, accusing the company of illegally deceiving customers and making it difficult for them to cancel their Prime memberships. The FTC claims that Amazon violated the FTC Act and the Restore Online Shoppers’ Confidence Act by using deceptive tactics, known as “dark patterns,” to push customers into enrolling in Prime without their consent.
According to the FTC’s statement, Amazon made the option to purchase items without enrolling in Prime more difficult than purchasing with a subscription. The agency alleges that Amazon tricked customers into recurring subscriptions without their consent, costing them significant money. FTC Chair Lina Khan stated, “Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money.”
Amazon Prime, launched in 2005, offers customers free two-day shipping, music and video streaming, and other exclusive perks for a monthly fee of $14.99 or an upfront annual payment of $139. With an estimated 150 million US-based members and a total of 200 million members worldwide, Amazon Prime’s subscription fees contribute about $25 billion to the company’s annual revenue, which amounted to $514 billion in 2022.
The lawsuit, filed in the US District Court for the Western District of Washington, comes more than two years after the FTC initiated its investigation into Amazon’s sign-up and cancellation processes. The complaint alleges that Amazon purposely made it difficult for Prime members to cancel their memberships and that the company’s leadership slowed down or rejected changes that would have improved the cancellation process. Some customers were also presented with ambiguous buttons during their transactions, potentially enrolling them in Prime without their knowledge or consent.
FTC Chair Lina Khan claims the agency has numerous allegations supporting its complaint against Amazon, which also accuses the company of attempting to delay the FTC’s investigation. Khan issued an order in September requiring Amazon owner Jeff Bezos and CEO Andy Jassy to testify on the company’s Prime practices.
Amazon had previously requested that Khan step down from her position, citing her past criticism of Big Tech. Khan has been a vocal critic of Amazon, Meta, and Apple since her appointment as FTC chair in June.
This legal action by the FTC is the latest attempt to hold Big Tech accountable for policies that prioritize profit over privacy. Earlier this month, the FTC reached a $5.8 million settlement with Amazon over privacy violations, and the company agreed to pay $25 million to settle allegations of violating children’s privacy rights.
Frequently Asked Questions (FAQs):
Q: What are the allegations against Amazon by the FTC?
A: The FTC alleges that Amazon deceived customers into signing up for Prime without their consent and made it difficult for them to cancel their memberships.
Q: What is the significance of Amazon Prime?
A: Amazon Prime is a subscription service that offers customers benefits like free two-day shipping, music and video streaming, and exclusive perks. It contributes about $25 billion to Amazon’s annual revenue.
Q: How many Amazon Prime members are there?
A: There are an estimated 150 million Prime members in the US and a total of 200 million worldwide.
Q: How much does Amazon Prime cost?
A: Amazon Prime costs $14.99 per month or a one-time annual payment of $139.
Q: What financial impact does Amazon Prime have on Amazon?
A: Amazon Prime’s subscription fees contribute about $25 billion to Amazon’s annual revenue, which totaled $514 billion in 2022.
Q: What other recent legal issues has Amazon faced?
A: Amazon recently settled with the FTC for $5.8 million over privacy violations and paid $25 million for allegations of violating children’s privacy rights.
Q: Who is leading the FTC’s effort against Amazon?
A: Lina Khan, the chair of the FTC, is spearheading the agency’s action against Amazon. She has been a vocal critic of Big Tech companies, including Amazon, since her appointment in June.
Amazon Faces Lawsuit by FTC Regarding Prime Subscription Sign-Up and Cancellation Procedures
In a move that could have significant implications for Amazon, the Federal Trade Commission (FTC) announced on Wednesday that it is suing the e-commerce giant for allegedly deceiving customers into signing up for its Prime program and then making it difficult for them to cancel. The FTC claims that Amazon violated the FTC Act and the Restore Online Shoppers’ Confidence Act by using deceptive tactics, known as “dark patterns,” to push customers into enrolling in Prime without their permission.
The complaint alleges that the option to purchase items on Amazon without enrolling in Prime was intentionally more difficult than simply making a purchase without subscribing. The FTC Chair, Lina Khan, stated that “Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money.”
Amazon Prime, which was founded in 2005, offers customers free two-day shipping, music and video streaming, and other exclusive perks for a monthly fee of $14.99 or an annual fee of $139. With an estimated 200 million Amazon Prime members globally, including 150 million in the US, the subscription fees contribute approximately $25 billion to Amazon’s annual revenue.
The lawsuit, filed in the US District Court for the Western District of Washington, comes more than two years after the FTC initiated its investigation into Amazon’s sign-up and cancellation processes. The complaint claims that Amazon’s leadership deliberately hindered efforts to make it easier for Prime members to cancel their memberships. It also alleges that customers were sometimes presented with ambiguous buttons that may have enrolled them in Prime without their knowledge.
FTC Chair Lina Khan has stated that the agency has multiple allegations that support its latest complaint against Amazon, including allegations that the company attempted to delay the FTC’s investigation. As part of the probe, Khan issued an order in September requiring Amazon’s owner Jeff Bezos and CEO Andy Jassy to testify on the company’s Prime practices.
Representatives for the FTC and Amazon have not yet responded to requests for comment. Lina Khan, who has been a vocal critic of Big Tech, has been leading the FTC’s efforts to hold companies accountable for their practices since becoming chair in June.
This lawsuit is the latest in a series of actions taken by the FTC to address privacy violations and concerns related to Big Tech companies. Earlier this month, the FTC reached a $5.8 million settlement with Amazon over privacy violations, and the company agreed to pay $25 million to settle allegations of violating children’s privacy rights.
It remains to be seen how this lawsuit will unfold and what impact it will have on Amazon and its Prime program.