FTC Slams Amazon with Lawsuit Over Prime Subscriptions: Here’s What You Need to Know

The Federal Trade Commission (FTC) has filed a lawsuit against Amazon, claiming that the giant online retail company has intentionally tricked millions of consumers into signing up for Amazon Prime and made the process of cancelling the subscription complicated in order to keep subscribers locked into renewing the service automatically.

And services its across, the company has violated the Restore Online Shoppers’ Confidence Act and the FTC Act by failing to clearly disclose the terms and price of its Prime service, provide a simple cancellation method, and obtain consent before charging consumers. The lawsuit claims that Amazon has relied on “dark patterns” – deceptive design tactics used to manipulate users’ choices – for years to deceive consumers into enrolling in recurring Prime subscriptions across its platforms and services.

In a declaration, FTC Chair Lina M. Khan stated, “These deceitful strategies damage both consumers and law-abiding enterprises.” Amazon deceived and ensnared individuals into continuous subscriptions without their agreement, not only causing annoyance to users but also resulting in substantial financial losses.

The FTC claims that Amazon unlawfully distracts and disguises relevant information about its Prime service, including the fact that the program automatically renews unless the subscriber cancels. However, the company often presents consumers with numerous opportunities to subscribe to Prime while they are shopping on Amazon or using an Amazon Fire TV streaming device to surf Prime Video. Whether a consumer is surfing Prime Video, shopping on Amazon, or using an Amazon Fire TV streaming device, the fact remains that the program automatically renews unless the subscriber cancels.

The lawsuit asserts repeatedly that the lawsuit shares the same information.

FTC Slams Amazon with Lawsuit Over Prime Subscriptions: Here’s What You Need to Know

The shopper is unable to proceed with their order unless they either choose the option to subscribe or click on the smaller “No thanks” link. Moreover, without scrolling down or clicking on the small arrow in the corner, a consumer cannot access the complete text at the bottom of the footer, which is dangerously near the yellow button that will sign them up for Amazon Prime.

The document explains that to maintain enrollment, the individual needs to navigate back, modify the plan to “Prime Video” on a different page, and click a gray “change” button on the right. Notably, the plan category automatically sets to “Prime,” and individuals attempting to sign up for the Prime Video service are directed to a page where they must verify their information and choose a plan, as stated in the FTC’s complaint, which offers another instance of the company’s purported deceptive strategies.

The lawsuit alleges that by default, users are automatically enrolled in Amazon Prime when they click on the orange “Start your free trial” button. This can lead to unintentional subscription to the more expensive Amazon Prime service instead of Prime Video, especially for users who are unaware of the distinction between the two services.

The FTC lawsuit claims that the cancellation process for Prime is intended to “frustrate” users.

The cancellation process for a Prime subscription, referred to internally as the “Iliad” by Homer in his lengthy epic about the Trojan War, used to only have two ways to cancel: navigating through a fifteen-click, six-page option or contacting customer service. However, in April of this year, Amazon made changes to its arduous cancellation process under pressure from the FTC, before the case tells us.

A subscriber who had used the services of Prime had access to a summary of the promotions and discounts, as well as options to switch between annual and monthly payments. In a lawsuit filed by the state, it is alleged that when the user selected the option to be routed to the “flow” of the Iliad, they were directed to the Amazon Prime pages. To cancel their Amazon Prime membership, the first subscriber needed to navigate through multiple columns and drop-down menus to find the “End Membership” button.

Expresses the grievance, “Amazon devised the Iliad termination procedure … To be intricate,” further stating that the corporation “impeded or declined modifications in user experience that would have rendered Iliad more straightforward for customers because those modifications negatively impacted Amazon’s financial status.”

The submission states that, in the absence of intervention from the FTC, the organization would probably reintroduce the Iliad procedure. Despite Amazon’s recent overhaul of its termination procedure, it is still far from straightforward and continues to pose challenges for users looking to terminate their subscriptions.

Is this a collective legal action? How can I become a participant?

The government agency, FTC, is taking action against Amazon in hopes of providing restitution to injured consumers through a federal court lawsuit. There is no need for Amazon users to join or sign up, as this is not a class action lawsuit.

The Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) are authorized federal agencies that take action against individuals or companies they believe are violating the law, when there is reason to believe that it is in the public interest to do so.

The Head here provides a list of recent actions by the FTC that resulted in consumer refunds. More information is available about how the agency issues refunds. Some lawsuits filed by the CFPB or FTC may result in successful refunds for consumers.

The process may be gradual, but like any legal case, we will ensure to provide an update here if the lawsuit described on this page reaches a resolution.

For more information on this lawsuit, you can check out the official press release from the FTC, although the complaint below can be read heavily redacted.

The Federal Trade Commission goes head-to-head with Amazon

According to the lawsuit, the agency claims that Amazon held back and concealed relevant information, deceived the agency, and tried to postpone the investigation ever since. The lawsuit states that the agency initially issued a subpoena to Amazon in March 2021 in order to obtain information to assess whether the Prime subscription procedure and the Iliad cancellation process violated federal law.

“But for Amazon’s effort to frustrate the Commission’s investigation,” the complaint reads, “the Commission would have filed this action many months earlier.”.

An Amazon spokesperson told the Associated Press that the company found it “troubling” that the FTC did not give notice before initiating the lawsuit.

The spokesperson expressed, “It is extremely disappointing that our case did not progress in court as we had hoped, especially considering the absence of any engagement during this time.”