FTC Sues Amazon Over Shady Prime Practices
Update 6/21/2023: An Amazon spokesperson has reached out to SlashGear with the following statement: "The FTC's claims are false on the facts and the law. 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. As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the facts becoming clear as this case plays out. We also find it concerning that the FTC announced this lawsuit without notice to us, in the midst of our discussions with FTC staff members to ensure they understand the facts, context, and legal issues, and before we were able to have a dialog with the Commissioners themselves before they filed a lawsuit. While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court."
Amazon is being sued by the Federal Trade Commission (FTC) because of how it allegedly handles its Prime memberships. The company is accused of encouraging sign-ups in a way that the governmental agency considers illegal, and then makes it difficult for subscribers to cancel. The apparent underhanded tactics include "dark patterns" which the lawsuit describes as "manipulative, coercive, or deceptive user interface designs" that purportedly encourage sign-ups to the company's premium service.
In a statement, FTC Chair Lina Khan said Amazon users were "tricked" into recurring subscriptions and alleged that the company's actions were "not only frustrating users but also costing them significant money." The full details haven't been revealed, but one of the things the lawsuit seems to be seeking is a civil penalty with an unspecified dollar amount. In addition to the current accusations, Amazon's higher-ups are also accused of resisting changes that would have made it easier for users to cancel their Prime subscriptions.
The subscription as it exists currently costs $139 per year, and includes benefits like free high-speed shipping, access to the "Prime Video" online streaming service, and the ability to shop in Amazon's annual "Prime Day" sales, among other benefits. There are currently over 200 million Prime users across the globe.
This isn't the first time Amazon has fallen foul of the FTC
Amazon has had a few run-ins with the FTC over the years, including an incident a few years ago relating to in-app charges which saw around $70 million refunded to customers. The purchases in question were made by children who did not have the permission of the account holders at the time. The suit argued the bright buttons and enticing pictures encouraged minors to make the purchases, and an eventual settlement left the Silicon Valley-based company dishing out refunds to all affected customers who applied.
It's likely that a similar ruling, in this case, would see at least some Prime members receive monetary compensation, in addition to Amazon having to change its marketing practices.
Customers aren't the only ones who have been the subjects of one of Amazon's perceived wrongdoings. Last year, the company was accused of stealing tips from delivery drivers. The accusations followed a previous incident which led to the company quietly reimbursing some of its delivery drivers after reaching an agreement with the FTC over a separate incident.