WASHINGTON – In its latest move against Amazon, the U.S. Federal Trade Commission (FTC) has accused the e-commerce giant of enrolling millions of consumers into its paid subscription service, Amazon Prime, without their consent and making it difficult for them to cancel. The FTC filed a lawsuit in federal court in Seattle, claiming that Amazon has knowingly deceived consumers into unknowingly signing up for Amazon Prime. Amazon has denied these allegations, stating that the claims are false both in terms of facts and the law.
According to the FTC, Amazon has employed manipulative and deceptive user-interface designs, often referred to as “dark patterns,” to trick consumers into automatically renewing their Prime subscriptions. The agency is seeking civil penalties and a permanent injunction to prevent future violations. This lawsuit is part of President Joe Biden’s administration’s efforts to curb the excessive market power of Big Tech companies and promote competition for the benefit of consumers.
Amazon Prime is the world’s largest subscription program, generating $25 billion in revenue annually. It offers various benefits such as fast, free shipping, discounts, and access to a wide range of entertainment content. Prime members pay $139 per year and play a significant role in driving Amazon’s sales volume. With over 200 million members worldwide, Prime is crucial to Amazon’s other services like Prime Video and its grocery delivery.
To counter the FTC’s claims, Amazon emphasized that customers genuinely love Prime and that the sign-up and cancellation processes are designed to be clear and simple. The company expressed concern that the lawsuit was announced without prior notice, interfering with ongoing discussions between Amazon and FTC staff members.
The FTC’s investigation into Amazon’s Prime program began in March 2021, focusing on the sign-up and cancellation processes. The complaint alleges that consumers faced multiple complicated steps when attempting to cancel their Prime membership. Amazon has reportedly used the term “Iliad Flow” to describe its cancellation process, alluding to the lengthy Trojan war described in Homer’s epic poem.
Insider Intelligence analyst Evelyn Mitchell-Wolf commented on the FTC’s actions, stating that while Amazon is being singled out, it is not uncommon for companies to make it more challenging to cancel an account than to create one. Mitchell-Wolf believes that the FTC will have little difficulty proving harm to consumers if Amazon obstructs their ability to cancel Prime memberships.
This latest lawsuit follows the FTC’s settlements with Amazon’s Ring doorbell camera unit, where cameras were used for spying, and allegations that Amazon violated children’s privacy rights regarding its Alexa virtual assistant technology.
According to Tom Forte, Managing Director at D.A. Davidson Companies, this lawsuit reflects global efforts to curb the excessive influence of big tech companies like Amazon, Apple, and Meta. However, Forte also pointed out that other retailers and subscription services similarly make it difficult for customers to terminate their memberships.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
