business news in context, analysis with attitude

The Federal Trade Commission (FTC) yesterday said that it "is taking action against, Inc. for its years-long effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their subscriptions to Prime … the FTC charges that Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime. Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as 'dark patterns' to trick consumers into enrolling in automatically-renewing Prime subscriptions."

Politico writes that "the complaint alleges that Amazon’s practices violated the FTC Act and the Restore Online Shoppers’ Confidence Act, a law that mandates clear payment terms in certain online shopping transactions."

The FTC goes on:

"Amazon also knowingly complicated the cancellation process for Prime subscribers who sought to end their membership. The primary purpose of its Prime cancellation process was not to enable subscribers to cancel, but to stop them. Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line."

For now, the FTC said, the "complaint is significantly redacted, though the FTC has told the Court it does not find the need for ongoing secrecy compelling. Nevertheless, the complaint contains a number of allegations related to the company’s decision not to make changes to prevent nonconsensual enrollment in Prime and the difficulties consumers faced in attempting to unsubscribe from the service … During Amazon’s online checkout process, consumers were faced with numerous opportunities to subscribe to Amazon Prime at $14.99/month. In many cases, the option to purchase items on Amazon without subscribing to Prime was more difficult for consumers to locate. In some cases, the button presented to consumers to complete their transaction did not clearly state that in choosing that option they were also agreeing to join Prime for a recurring subscription.

"The FTC charges that Amazon put in place a cancellation process designed to deter consumers from successfully unsubscribing from Prime. Previous reporting about the process in the media has noted that Amazon used the term 'Iliad' to describe the process, which the reporting cites as an allusion to Homer’s epic poem set over twenty-four books and nearly 16,000 lines about the decade-long Trojan War.

"Consumers who attempted to cancel Prime were faced with multiple steps to actually accomplish the task of cancelling, according to the complaint. Consumers had to first locate the cancellation flow, which Amazon made difficult. Once they located the cancellation flow, they were redirected to multiple pages that presented several offers to continue the subscription at a discounted price, to simply turn off the auto-renew feature, or to decide not to cancel. Only after clicking through these pages could consumers finally cancel the service.

"The complaint notes that Amazon was aware of consumers being nonconsensually enrolled and the complex and confusing process to cancel Prime that the company’s executives failed to take any meaningful steps to address the issues until they were aware of the FTC investigation. In the complaint, the FTC also alleges that Amazon attempted to delay and hinder the Commission’s investigation in multiple instances."

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina M. Khan said in a prepared statement. “These manipulative tactics harm consumers and law-abiding businesses alike. The FTC will continue to vigorously protect Americans from 'dark patterns' and other unfair or deceptive practices in digital markets.”

The Washington Post writes that "the FTC has also sued internet phone company Vonage, video gamemaker Epic and Credit Karma over their alleged use of 'dark patterns.' The Epic suit settled for $245 million in December; the Vonage case settled for $100 million."  The Post also writes that "according to the FTC’s complaint, Amazon 'considerably revamped' its cancellation process before the suit was filed.  'However, before that time, the primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them'," the FTC said.

KC's View:

This lawsuit is just part of the long-expected legal battle between Amazon and Khan, who was critical of the company's practices years before she got the FTC chair.  And it probably won't be the last time the two sides face off in the courts.

I find myself unable to judge the quality of the FTC charges.  I've been a Prime member pretty much since the program launched in 2005, and it never occurred to me that dark patterns had lured me into its clutches.  I thought I was there for the fast shipping and all the other benefits.  And I never realized how hard it was to get out of Prime membership, because I've never tried.  Never even thought about trying.  Gullible me, I totally bought into Jeff Bezos' declaration that he wanted Prime to be so compelling that it would be irresponsible not to be a member.  (I hope this contretemps doesn't have any impact on my Prime membership.)

I have no idea how this will turn out, but one thing is sure.  The lawyers are going to get rich.