The U.S. Federal Trade Commission filed suit against Amazon.com Inc (AMZN.O) on Wednesday, accusing the retailer of enrolling millions of consumers into its paid subscription Amazon Prime service without their consent and making it hard for them to cancel.
The FTC filed suit in federal court in Seattle and said it alleged that “Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime.” The FTC said Amazon used “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions.”
Amazon Prime offers fast, free shipping on millions of items, various discounts and access to movies, music and television series, as well as other benefits. Prime members in the United States pay $139 per year and drive much of Amazon’s sales volume. Prime has more than 200 million members worldwide.
The FTC said Amazon generates $25 billion in revenue from Prime subscriptions annually and that “one of Amazon’s primary business goals – and the primary business goal of Prime – is increasing subscriber numbers.”
The lawsuit said that under substantial pressure from the FTC, Amazon changed its cancellation process in April but that “violations are ongoing.” The agency is seeking civil penalties and a permanent injunction to prevent future violations.
Amazon’s shares were down 0.9% in mid-morning trading.
The company did not immediately respond to a request for comment.
The FTC has been investigating sign-up and cancellation processes for the Prime program since March 2021.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in a statement.
Consumers who attempted to cancel Prime were faced with multiple steps to actually accomplish the task of cancelling, according to the complaint. The FTC complaint said Amazon used the term “Iliad Flow” to describe the process, referencing Homer’s epic poem about the lengthy Trojan war.
SOURCE: REUTERS
