FTC Sues Amazon Over 'Manipulative' Tactics to Get Customers Signed Up for 'Prime'

(AP Photo/Reed Saxon, File)

The Federal Trade Commission (FCC) is suing Amazon.com for tricking customers into enrolling in the company’s signature program, Amazon Prime.

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said.

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The writing was on the wall for Amazon the day that Khan was confirmed by the Senate. Her career has been made by her criticism of Amazon, and the company demanded her recusal from any FTC action taken against it. That didn’t work, and she’s now going after Amazon’s most profitable program.

Related: GOP FTC Commissioner Resigns In Protest of Democratic Chairperson’s ‘Disregard for the Rule of Law’

Did Amazon “dupe” customers? Everything on the site is geared to get you to sign up for Prime and unless you’re careful and read everything, you’re liable to accidentally sign up. I initially resisted Amazon Prime, thinking I didn’t need it. But eventually, I signed up for the free shipping and am now totally hooked.

At least I knew what I was getting into.

Wall Street Journal:

An Amazon spokesman dismissed the FTC’s allegations as “false on the facts and the law.”

The complaint alleged that Amazon used “manipulative, coercive, or deceptive user interface designs known as dark patterns” to dupe users into automatically renewing Prime subscriptions.

“Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line,” the FTC added.

The FTC has been examining the use of dark patterns—a term for design tactics that prompt users into actions that benefit the company but not necessarily the user—in online commerce for several years.

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No one is better at “dark patterns” than Amazon. But other companies like Vonage are also guilty of the practice. “Vonage last year paid $100 million to settle FTC allegations that it imposed hurdles for customers to cancel the internet-based telephone service and charged unexpected termination fees, according to the WSJ.

For years, Amazon made it easy to enroll in Prime with one or two clicks, but created a “four-page, six-click, fifteen-option cancellation process” known internally as “the Iliad Flow,” the FTC said, in an apparent reference to Homer’s epic about the Trojan War. The agency said the “labyrinthine” procedure was designed to make it cumbersome and confusing for customers to cancel Prime.

Amazon revamped its Prime cancellation process for some subscribers in April, shortly before the FTC filed the case, according to the complaint. Amazon knew its policies were “legally indefensible,” the agency alleged.

Some services use third-party billing and make it nearly impossible to cancel a subscription or a service by hiding the link to the billing company. The FTC should work on that next.

I love Amazon Prime, and I’m not alone. According to JP Morgan, Amazon Prime is in 72% of American homes and it’s “estimated in June 2022 that a Prime subscription would cost $1,100 a year if its included benefits were sold separately,” according to the WSJ.  JPMorgan estimated that Prime would have 270 million members around the world by the end of 2022.

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Big Tech does, indeed, offer wonderful benefits and services. But if they can’t follow the rules like everyone else, they should pay for their transgression an amount that will give them pause to ever do it again.

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