Amazon Faces Lawsuit Over Deceptive Practices in Prime Membership Sign-Ups
A federal judge in Seattle has refused to dismiss a lawsuit filed by the Federal Trade Commission (FTC) against Amazon.com Inc., accusing the retail giant of misleading customers into signing up for Prime memberships and making it difficult for them to unsubscribe. U.S. District Judge John Chun stated that motions to dismiss are only granted in rare situations where the facts in a complaint conclusively prove that consumers are not likely to be deceived. In this case, Judge Chun found that a reasonable consumer could easily miss the small print at the bottom of the page, despite the bolded price of Prime and the automatic renewal information.
The FTC filed the lawsuit in June 2023, alleging that Amazon had knowingly tricked millions of consumers into unknowingly enrolling in its $14.99-a-month Prime membership service. The agency claimed that Amazon used manipulative and deceptive user-interface designs known as “dark patterns” to enroll users in automatically renewing their subscriptions without their consent. According to the lawsuit, the problem of nonconsensual enrollment was well-known within Amazon, and some employees had urged company executives to address the issue.
The FTC further accused Amazon of deliberately slowing down or avoiding user experience changes that would have reduced nonconsensual enrollment because they would have negatively affected the company’s bottom line. The lawsuit also claimed that canceling Prime memberships was made difficult by a complex cancellation process called the “Iliad Flow.” Users had to navigate a four-page, six-click, fifteen-option process to cancel their subscriptions. Amazon initially made changes to increase clarity for consumers but later rolled back those changes due to a decrease in new Prime subscribers.
Under pressure from the FTC, Amazon revamped its cancellation process in April 2023. However, according to the lawsuit, it still requires multiple clicks for consumers to cancel their memberships. The FTC is seeking civil penalties and a permanent injunction against Amazon to prevent future violations.
Amazon has denied the allegations, stating that the claims are false on both the facts and the law. The company maintains that it makes it clear and simple for customers to sign up for or cancel their Prime memberships. It also argues that it has prominently and repeatedly disclosed key terms, including the price and automatic renewal feature, to customers.
In addition to this lawsuit, Amazon is facing legal challenges from an investor over its alleged scheme to prevent customers from unsubscribing to Prime. The company is also being sued by the FTC for alleged violations of antitrust laws related to unfair strategies to maintain monopoly power. Despite these legal battles, Amazon continues to deny the charges.
A 10-day non-jury trial in the FTC lawsuit is scheduled for February 2025. The outcome of this case will shed light on the extent of Amazon’s responsibility in ensuring transparency and ease of use for its customers.
