The US regulator Federal Trade Commission (FTC) has filed a lawsuit against the online giant Amazon. He is said to have tried for years to register consumers with Amazon Prime without their consent and to make it difficult for them to cancel their subscription. In the lawsuit, filed in the US District Court for the Western District of Washington, the agency accuses the company of using misleading designs, so-called dark patterns. The idea was to entice consumers to sign up for Prime, which offers benefits like faster delivery to subscribers for $139 a year or $14.99 a month.
Amazon is said to have misled consumers
According to the FTC, Amazon made it difficult for customers to purchase an item without also purchasing an Amazon Prime membership. In some cases, consumers were presented with a button to complete their transaction that did not make it clear that they were also signing up for Prime. Canceling a subscription was often too complicated, and Amazon management delayed or refused to make changes that would have made cancellation easier. According to a US survey from 2022, Amazon Prime is one of the most popular subscription streaming services, but is also the most frequently canceled, as pressetext reports.
Internally, Amazon referred to the process as the “Iliad,” a reference to the ancient Greek poem about the long siege of Troy in the Trojan War. “Amazon has lured and trapped people without their consent into recurring subscriptions that are not only frustrating but also cost them a lot of money,” said FTC Chairwoman Lina Khan. “These manipulative tactics harm consumers and law-abiding businesses alike.” The FTC argues that Amazon's practices violate the FTC Act and another law called the Restore Online Shoppers' Confidence Act. Amazon denies this.
The company disagrees
Launched in 2005, Prime has more than 200 million members worldwide who benefit from benefits such as free shipping, returns and the Prime Video streaming service. In the first three months of 2023, Amazon said it earned $9.6 billion from subscriptions, 17 percent more than in the same period last year.
The FTC also accuses Amazon of obstructing the agency's investigation into Amazon Prime, which began in 2021, in several cases. For the past two years, the agency has been increasingly cracking down on fraudulent sign-up and cancellation tactics that could trick consumers into buying products or services they don't want. In December 2022, the FTC announced that Epic Games, maker of the popular video game “Fortnite,” must pay $245 million in customer refunds for fraudulent payment methods. In November, the telecommunications company Vonage settled for $100 million in a similar case.
Amazon tightens control
Layman said the company found it "disturbing" that the FTC filed the lawsuit without informing Amazon, even though the company had already spoken to FTC staff about Amazon Prime. The lawsuit comes at a time when Amazon faces increased regulatory scrutiny as the company seeks to expand its dominance in e-commerce and expand into other markets such as groceries and healthcare services.
Dispute comes from Carl Szabo, vice president and general counsel at tech industry group NetChoice: “The complaint is that Amazon is encouraging people to use Amazon Prime - that's like going after Kroger for advertising its rewards program or Costco for advertising its Pursue membership clubs.” For him, it is “absolutely clear that the FTC is an out-of-control agency that needs greater oversight. “Congress must exercise rigorous oversight to rein in the FTC by cutting funding and investigating its ethical lapses and abuses of power.”
Source:
Press release
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