In a significant legal move, the FTC sues Amazon over Prime, alleging deceptive user interface designs and coercive tactics. In a significant move against deceptive business practices, the Federal Trade Commission (FTC) has filed a lawsuit against Amazon, the e-commerce behemoth, alleging that the company employed manipulative user interface designs to deceive millions of consumers into signing up for its Prime subscription service.
The complaint, lodged in the US District Court for the Western District of Washington, specifically targets Amazon for its alleged attempts to retain users who wished to cancel their memberships.
The FTC complaint describes Amazon’s utilization of what is known as “dark patterns,” which are coercive or deceptive user-interface designs. These dark patterns, according to the complaint, were strategically employed to lure consumers into enrolling in automatically renewing Prime subscriptions. Moreover, the complaint asserts that Amazon deliberately created an intricate and convoluted cancellation process, likened to a labyrinth, with the intention of distracting and deterring consumers from successfully canceling their subscriptions.
FTC sues Amazon over Prime: Deception exposed
This lawsuit represents a significant milestone for the FTC as it takes a decisive stance against business practices that exploit consumers through psychological tactics, either by enticing them into subscriptions or making it challenging for them to terminate their commitments. The case comes after an extensive months-long investigation into Amazon’s Prime practices, which involved testimonies from the company’s founder, Jeff Bezos, and its CEO, Andy Jassy.
The allegations strike at the heart of Amazon’s business model. With over 200 million paid Prime subscribers in 2021, Amazon has seen immense success, partially due to substantial investments in original content and expedited shipping. Through Prime, Amazon generates billions in revenue from subscriptions while simultaneously encouraging customers to spend more time and money on its platforms.
Amazon swiftly responded to the FTC’s claims, labeling them as “false on the facts and the law” and expressing disappointment at the lack of notice before the lawsuit was filed. The company highlighted ongoing discussions with FTC staff members to provide comprehensive context and resolve any legal issues. Despite this setback, Amazon remains determined to present its case in court.
According to the complaint, Amazon took some measures in April, under pressure from the FTC, to simplify the cancellation process for Prime subscriptions. However, prior to this, the company allegedly denied customers the ability to easily terminate their Prime subscriptions online. Since 2016, Amazon purportedly implemented a complex, multi-step cancellation process internally referred to as “Iliad Flow,” reminiscent of Homer’s epic about the protracted Trojan War.
The FTC complaint reveals that, apart from contacting customer service, Amazon offered no alternatives for cancellation, compelling users to navigate a time-consuming, four-page, six-click, fifteen-option process filled with off-ramps designed to deter and dissuade customers by emphasizing potential missed benefits, promotional discounts, and exclusive deals.
Amazon settles FTC privacy complaints, pays $30M for Alexa and Ring products
In contrast, signing up for Prime required only two simple clicks, according to the FTC. Additionally, crucial information about recurring charges was allegedly buried in fine print, exacerbating the difficulty for consumers to understand the terms of their subscriptions.
This lawsuit against Amazon marks a significant development in the tenure of FTC Chair Lina Khan, who spearheaded a broader discussion on the impact of tech platforms on competition through her influential journal article in 2017, which raised concerns about potential antitrust issues involving Amazon.
Just last month, Amazon reached a settlement with the FTC, agreeing to pay over $30 million to resolve two privacy complaints related to its Alexa and Ring products.
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