Amazon sued for 'manipulating' customers into enrolling for Prime membership

The US Federal Trade Commission (FTC) has filed a lawsuit against Amazon, alleging that the e-commerce giant enrolled millions of consumers into its paid subscription service, Amazon Prime, without their knowledge or consent.

The agency claimed that Amazon employed manipulative user-interface designs, commonly referred to as "dark patterns," to trick consumers into automatically renewing their Prime subscriptions and made it challenging for them to cancel.

This latest action by the FTC is part of US President Joe Biden's administration's ongoing efforts to curb the market power of Big Tech companies and promote competition to safeguard consumer interests.

In response to the lawsuit, Amazon called the FTC's claims "false on the facts and the law" in a statement issued by the company.

The FTC is seeking civil penalties and a permanent injunction to prevent future violations by Amazon.

According to the FTC, Amazon Prime is the largest subscription programme globally, generating a staggering $25 billion in annual revenue. It offers members fast and free shipping on millions of items, discounts, access to a vast library of movies, music and TV series, among other benefits. Prime members in the US pay an annual fee of $139, which significantly contributes to Amazon's overall sales volume. The service, boasting over 200 million members worldwide, is vital to Amazon's other business sectors, including Prime Video streaming and grocery delivery services.

Amazon's statement highlighted customers' satisfaction with Prime and asserted that the company ensures a clear and straightforward process for both sign-up and cancellation of memberships. However, Amazon expressed concern that the FTC announced the lawsuit without prior notice, interrupting ongoing discussions between the company and FTC staff members to address the facts, context and legal issues surrounding the case.

Coinciding with the lawsuit's filing, Amazon also revealed the dates for its upcoming major sales event, Prime Day, scheduled for July. The FTC lawsuit highlights that Amazon modified its cancellation process in April under significant pressure from the agency. Nevertheless, the complaint alleges that violations persist, as cancelling a Prime membership on Amazon.com still requires five clicks on desktop and six on mobile devices.

During its investigation since March 2021, the FTC found that consumers faced a convoluted and complex process when attempting to cancel their Prime subscriptions. The complaint states that Amazon internally referred to this process as "Iliad Flow," alluding to Homer's epic poem about the protracted Trojan War.

The FTC also accused Amazon of intentional misconduct, deliberately providing evasive responses to document requests to hinder the agency's investigation.