FTC Sues Amazon

The US Federal Trade Commission (FTC) on Wednesday, June 21, sued Amazon, accusing the e-commerce giant of using a deception technique to force millions of consumers to subscribe to the Prime service.

FTC Sues Amazon

The regulator claims that the retailer was able to force several million people to subscribe to the platform using deceptive user interface design. The complaint was filed in the U.S. District Court for the Western District of Washington. The text of the document also contains an allegation that the e-commerce giant made attempts to keep the subscription of users who decided to abandon it.

The FTC stated that in order to achieve its illegal goals, the company used the design of the user interface, which is called dark patterns and is used to mislead, force certain actions or perform manipulation. Consumers who have been exposed to Amazon’s unscrupulous method have been issued automatically renewed Prime subscriptions.

The regulator also claims that the company deliberately complicated the subscription cancellation process, making it less easy to understand and implement compared to the registration procedure. The FTC says this decision was intended to distract or scare consumers away from their intentions.

This trial is the most ambitious initiative of the regulator, which is aimed at suppressing the use of business practices designed to harm the clients of companies, luring them into a trap and then keeping them in it through various psychological techniques.

The complaint is a kind of interim outcome of a months-long investigation into the activities of Amazon Prime, during which the firm’s founder Jeff Bezos and CEO Andy Jassi testified.

The trial concerns an important component of the e-commerce giant’s business structure. In 2021, the number of paid subscribers of Amazon Prime exceeded 200 million. The positive dynamic was partly facilitated by investments in the creation of original content. A company with the help of this service can receive billions of dollars in revenue, which is based on subscriptions and increased engagement of customers who begin to spend more money and time on the platform.

Amazon, commenting on the FTC’s claims, said that the allegations are false from the point of view of facts and the law. The company also claims that it has not received notification of the regulator’s intention to file a complaint. The e-commerce giant described this circumstance as alarming, noting that the FTC went to court during its interaction with Amazon, in which the company’s employees intended to make sure that the commission understands the facts, context, and essence of legal issues.

The e-commerce giant has announced its intention to defend its case in court. The company also focused on the fact that the lack of normal interaction with the regulator is disappointing.

The complaint filed with the court contains information that in April, Amazon, in response to the impact of the FTC, took measures to simplify the procedure for canceling Prime subscriptions, but before that, it repeatedly denied customers this opportunity.

The regulator states that since 2016, the company has been using a complex, multi-stage algorithm for canceling subscriptions. The Commission claims that consumers had no choice but to go through a complicated procedure or contact the support service, which in fact did not simplify the process.

The FTC states that customers had to go through a four-page cancellation process in six clicks with fifteen options. In this case, there were numerous digressions, including warnings about missed benefits and advertising discounts, offers for deals. All these elements of the procedure, according to the regulator, are designed to distract the consumer’s attention and influence his actions.

At the same time, Amazon has made it easier to register for Prime in just two clicks. The regulator claims that the company often hid details about recurring accounts in small print.

The complaint against Amazon is the first major lawsuit against Amazon by FTC Chairwoman Lina Khan, who has been one of the initiators of a broad discussion about the impact of technology companies on competition. In 2017, she wrote an article on this topic, in which she drew attention to potential antitrust problems related to the activities of Amazon.

In May, the e-commerce giant agreed to pay more than $30 million to settle FTC complaints about violations of privacy principles in the operation of the company’s products called Alexa and Ring.

Serhii Mikhailov

2262 Posts 0 Comments

Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.