FTC Sues Amazon For Duping Consumers Into Signing Up For Prime, Making It Hard To Cancel

The US Federal Trade Commission, run by 34-year-old Democrat Lina Khan who as a student at Yale Law publishing an essay titled ”Amazon’s Antitrust Paradox”, sued Amazon.com on Wednesday, alleging the e-commerce giant duped consumers into signing up for its Prime membership service and deliberately made it hard to cancel.

The consumer protection agency filed a lawsuit in Washington state federal court claiming that Amazon’s website manipulates users into enrolling in Prime, where subscribers pay $139 a year for services like free delivery, video streaming and access to 100 million songs. The cancellation process for Prime is also difficult to find and requires multiple steps, the FTC alleged. The agency said Amazon referred to the process internally as the “Illiad,” after Homer’s lengthy epic poem, clearly reserving ”Minotaur’s labyrinth” for the New York Times’ (lack of) cancellation process.

“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 which is factually wrong, since every person who can read clearly understands what they get in exchange for paying for the Prime subscription (and even rabid Amazon critics are quick to note that the benefits outweigh the cost).

The FTC said Amazon’s tactics violate a 2010 consumer protection law designed to protect online shoppers.

2. The complaint details how Amazon sought to thwart users who tried to cancel their subscriptions. Internally Amazon called this process the “Iliad Flow”—analogizing the cancellation process to the epic tale of a brutal war.https://t.co/1fAlN3Zo6w

— Lina Khan (@linakhanFTC) June 21, 2023

4. This lawsuit builds on our ongoing work to protect Americans from firms who trick people into subscriptions and then trap them by making it hard to cancel, including through using ”dark patterns.” https://t.co/8OXV2vBxcl

— Lina Khan (@linakhanFTC) June 21, 2023

5. Our proposed ”click to cancel” rule would require that firms make it as easy to cancel a subscription as it is to sign up for one.

We’re collecting public comment on the proposal through Thursday 6/23. Anyone can submit a comment here:https://t.co/iWeNjLD3Uj

— Lina Khan (@linakhanFTC) June 21, 2023

About 167 million Amazon shoppers had Prime memberships as of March, unchanged from a year earlier, according to Consumer Intelligence Research Partners.

The suit is the third the FTC has filed against Amazon in the past month. The company agreed to pay $30.8 million to settle allegations that it failed to delete data about kids collected by its Alexa speakers and that its Ring doorbells and cameras illegally spied on users. Amazon said it disagreed with the FTC’s allegations but agreed to settlements to resolve the cases.

The news pushed Amazon stock 1% lower.