In a recent lawsuit, the U.S. Federal Trade Commission (FTC) has accused Amazon.com of enrolling millions of consumers into its paid subscription service, Amazon Prime, without their consent and making it difficult for them to cancel. This is the latest in a series of actions taken by President Joe Biden’s administration to regulate the market power of Big Tech firms and increase competition for greater consumer protection.
The FTC filed the lawsuit in a federal court in Seattle, alleging that Amazon used “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions.” The lawsuit comes as part of an FTC investigation into sign-up and cancellation processes for the Prime program that began in March 2021.
Amazon Prime, which generates $25 billion in annual revenue, is the world’s largest subscription program. It offers fast, free shipping on millions of items, various discounts, and access to movies, music, and television series, among other benefits. Prime members in the United States pay $139 per year, and the program has more than 200 million members worldwide.
The FTC’s lawsuit states that Amazon’s primary business goal is to increase subscriber numbers. It alleges that Amazon changed its cancellation process in April under pressure from the FTC, but violations are still ongoing. The agency is seeking civil penalties and a permanent injunction to prevent future violations.
The lawsuit also accuses Amazon of “intentional misconduct” intended to delay the FTC’s investigation by providing “bad faith” responses to requests for documents. The FTC has previously settled with Amazon’s Ring doorbell camera unit for $5.8 million after the agency said cameras had been used for spying on some customers. On the same day, the FTC said Amazon agreed to pay $25 million to settle allegations that it violated children’s privacy rights by failing to delete Alexa virtual assistant technology recordings at the request of parents and keeping them longer than necessary.
Amazon has not yet responded to the lawsuit. The company’s shares were down 0.9% in midday trading following the news.
This lawsuit is a significant development in the ongoing scrutiny of Big Tech companies and their business practices. It underscores the Biden administration’s commitment to regulating these companies and protecting consumers. The outcome of this lawsuit could have far-reaching implications for Amazon and other tech companies with similar subscription models.
In Greek mythology, the Labyrinth was an elaborate structure designed and built by the legendary artificer Daedalus for King Minos of Crete to hold the Minotaur, a creature that was half man and half bull. The FTC complaint interestingly used the term “Iliad Flow” to describe the process Amazon began in 2016, referencing Homer’s epic poem about the lengthy Trojan war, drawing a parallel to the complex and lengthy process consumers face when trying to cancel their Amazon Prime subscriptions. This comparison underscores the FTC’s accusation that Amazon intentionally makes it difficult for consumers to cancel their subscriptions, trapping them in a labyrinth-like process.
Source: Yahoo Finance