FTC is accusing Amazon of using "dark patterns" to make users subscribe to Prime

Amazon accused of misleading consumers into subscriptions

The Federal Trade Commission (FTC) has taken a stand against Amazon, alleging that the tech giant has engaged in a years-long scheme to enroll consumers into its Prime program without consent. Amazon, according to the FTC, has not only duped users into signing up but has also knowingly complicated the cancellation process, essentially trapping subscribers in the Prime program.

Amazon's use of manipulative, coercive, or deceptive user-interface designs, known as “dark patterns,” has allegedly led millions into unwittingly subscribing to the automatically renewing Prime service. The FTC further states that Amazon has actively sabotaged the cancellation process, introducing obstacles to deter consumers from successfully unsubscribing from Prime.

FTC Chair Lina M. Khan declared, pointing out that these practices were not only detrimental to users but they also hurt law-abiding businesses.^[1] On Twitter, she came forward with a series of Tweets confirming further shady practices by Amazon when dealing with this investigation:^[2]

The complaint also notes that Amazon’s counsel stonewalled the @FTC’s investigation through misdirection and delay. The extent of Amazon’s obstruction became clear after an insider leaked documents to Business Insider.

Navigating the labyrinth of Amazon Prime's cancellation process

The FTC's complaint provides an insightful glimpse into the intricacies of Amazon's tactics. According to the complaint, Amazon ensured that consumers encountered numerous opportunities to subscribe to Amazon Prime, priced at $14.99/month, during their online checkout process. In many cases, the option to finalize the purchase without subscribing to Prime was deliberately obfuscated.

To add salt to the wound, the button to complete transactions often did not make it clear that by choosing that option, the consumer also agreed to join Prime for a recurring subscription. These practices, the FTC claims, violate both the FTC Act and the Restore Online Shoppers' Confidence Act.

The cancellation process for Amazon Prime, internally termed as “Iliad,” is an allusion to Homer's epic poem that narrates a lengthy and challenging journey.^[3] Similarly, consumers attempting to cancel their Prime memberships are faced with a convoluted multi-step process. The complaint explains that the users must first locate the cancellation flow – a task made difficult by Amazon's design – followed by navigating through several offers and pages before they can finally cancel their subscription.

The wider implications and repercussions

Amazon's actions, as alleged by the FTC, have far-reaching consequences. The Prime program is the world's largest subscription program, generating $25 billion in revenue annually. With over 200 million members worldwide, the program is central to Amazon's business, driving sales volume and underpinning other services like Prime Video and grocery delivery.

Apart from the accusations concerning Prime, Amazon has been hit with $30 million in fines for alleged privacy violations linked to its Alexa virtual assistant and Ring video doorbell services.^[4] The FTC, along with the U.S. Department of Justice (DOJ), also accused Amazon of violating the Children's Online Privacy Protection Act.^[5]

This lawsuit signifies the Biden administration's commitment to curbing the outsized market power of Big Tech firms. Evelyn Mitchell-Wolf, a senior analyst at Insider Intelligence, believes the FTC is making an example of Amazon. She pointed out that while it is common for companies to make it difficult to cancel accounts, Amazon's market power might work against it, given the potential harm to consumers.

As Amazon faces these charges, the question remains: will this pave the way for more scrutiny and regulatory action against other major tech companies, which similarly make it hard for consumers to cancel their memberships?