The US Federal Trade Commission (FTC) sued retail platform Amazon.com Wednesday over allegations that Amazon deceived users into purchasing renewable subscriptions to its Prime service, which allows customers to save on delivery fees. The FTC claims that Amazon “duped millions of customers” into “unknowingly” purchasing these subscriptions through deceptive web design.
In a heavily redacted complaint, the FTC says Amazon used “dark patterns” to deceptively enroll customers in Prime. Dark patterns are web designs that trick users into agreeing to certain conditions or purchases. The FTC’s press release alleges that Amazon made it unreasonably difficult for some users to avoid enrolling in Prime when purchasing an item by making the option to purchase without enrollment hard to find.
The complaint also claims that Amazon muddled the difference between Prime and Amazon’s video service, Prime Video. This induced customers to purchase a Prime subscription, which includes Prime Video, instead of a subscription to the video service itself.
Furthermore, the FTC asserts that Amazon made it too challenging to cancel a Prime subscription by using a process the company named the “Illiad flow.” Calling Amazon’s online cancellation process “labyrinthine,” the FTC said that the number of pages and options a user had to sift through to cancel their Prime subscription without contacting customer service was intentionally designed to inhibit customers from canceling their subscriptions.
The FTC argues that Amazon violated Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce,” and Section 4 of the Restore Online Shoppers Confidence Act (ROSCA), which regulates how online marketplaces can facilitate purchases. Section 4 of ROSCA specifically regulates “negative options,” which are practices where a seller records a purchase due to a customer’s failure to act.
Amazon responded in a statement, saying that “The FTC’s claims are false on the facts and the law.” They further commented:
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 [dialogue] with the Commissioners themselves before they filed a lawsuit.
This is not the first time the FTC has taken action against Amazon. At the end of May, the US Department of Justice (DOJ), on behalf of the FTC, sued Amazon for keeping recordings of children’s voices taken by Amazon’s personal assistant product, Alexa. Amazon also paid the FTC $61.7 million in 2021 for withholding delivery drivers’ tips. In 2016, the FTC and Amazon agreed to end litigation over unauthorized app purchases made by children. As part of the deal, Amazon pledged to refund more than $70 million in total to affected customers.
Amazon has recently voiced discontent with FTC Chair Lina Khan over her criticism of the company before becoming FTC chair. In 2021 Amazon asked the FTC to recuse Khan from proceedings involving the company. Khan wrote an article while a Yale Law student called “Amazon’s Antitrust Paradox,” concerning how antitrust legislation is unequipped to address anticompetitive practices by online retailers while proposing both antitrust and competition-based solutions.
