Amazon Faces Off Against FTC Over Alleged ‘Deceptive’ Prime Program

Amazon is heading to court this week as the Federal Trade Commission (FTC) begins its long-awaited trial over the company’s Prime subscription program. The FTC alleges that Amazon misled tens of millions of consumers into signing up for Prime and made canceling memberships excessively difficult. Amazon denies any wrongdoing.

Background of the Case

The lawsuit, filed by the FTC in June 2023 under the Biden administration, claims that Amazon “tricked and trapped” users into its Prime program. The complaint points to website design tactics, including buttons that encouraged purchases without clearly indicating recurring subscription enrollment.

“Millions of consumers accidentally enrolled in Prime without knowledge or consent, but Amazon refused to fix this known problem,” the FTC said in a court filing, referring to the issue as an “unspoken cancer” internally.

Amazon argues that the sign-up and cancellation processes are “clear and simple,” stating that occasional customer errors are inevitable for a program as popular as Prime.

Trial Details

The jury trial began Monday in federal court in Seattle, with opening arguments scheduled for Tuesday. The trial is expected to last about a month. If the FTC prevails, two senior Amazon executives—Jamil Ghani, Prime boss, and Neil Lindsay, senior VP in the health division—could be held individually liable due to their oversight of Prime operations.

Russell Grandinetti, senior VP of international consumer, is also named in the complaint but is said to have had “less involvement” in the Prime organization.

Allegations of ‘Dark Patterns’

The FTC has accused Amazon of using “dark patterns”—deceptive design tactics intended to manipulate consumers. The agency highlights the complex cancellation process, requiring users to navigate four webpages and select from 15 options, internally nicknamed “Iliad.”

U.S. District Court Judge John Chun previously ruled that Amazon violated the Restore Online Shoppers’ Confidence Act by collecting billing information before disclosing subscription terms. The judge also criticized Amazon for withholding thousands of documents from the FTC, including internal emails describing subscription tactics as “shady” and referring to Jeff Bezos as “chief dark arts officer.”

Amazon’s Response

Amazon maintains its innocence. “Neither Amazon nor the individual defendants did anything wrong,” spokesperson Maxine Tagay said. “We remain confident that the facts will show these executives acted properly, and we always put customers first.”

The Prime case is part of the FTC’s broader crackdown on dark patterns, which includes similar lawsuits against Uber for alleged deceptive practices in its Uber One subscription service.

About Amazon Prime

Launched in 2005, Amazon Prime has grown to over 200 million members worldwide, generating billions in revenue. The $139-per-year membership offers perks like free shipping and access to streaming content. Data indicates that Prime members shop more frequently and spend more than non-members.