Amazon Faces FTC Lawsuit Over Prime Cancellation Policies

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To hear Federal Trade Commission Chairperson Lina Khan tell it, Amazon is like that labyrinthine maze outside The Shining’s Overlook Hotel: you can enter, but try getting out.

On Wednesday, the FTC sued Amazon for the ways the tech giant has allegedly “tricked and trapped people into recurring subscriptions without their consent.”

Prime of the Century

Cracking down on the online “cancellation time” tax — in which signing up is a lot less arduous than canceling — has been a hobby horse of the FTC for a while now. This spring, the agency proposed new rules that would require companies to make cancellations just as simple as sign-ups, with the threat of a $50,000 fine per violation. To put that in perspective, Amazon Prime had around 200 million subscribers last we checked.

The FTC’s latest lawsuit, filed in Amazon-headquartered Washington State, highlights the “Iliad”-esque odyssey required to cancel Prime memberships. But it’s also equally concerned with Amazon’s practices luring customers into the Prime pipeline:

  • The FTC alleges Amazon “knowingly duped millions of consumers” into Prime subscriptions using “manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’.”
  • Furthermore, these “nonconsensual enrollment” practices were well-known within the company, and it deliberately “slowed, avoided, and even undid user experience changes” designed to avoid them.

In sum, the agency argues, Amazon’s gauntlet amounts to a violation of a 2010 consumer protection law known as the Restore Online Shoppers’ Confidence Act. The FTC is now seeking monetary penalties.

Fool Me Once: This counts as the third time Khan has come at the company in the past couple of months. In May, Amazon agreed to a $30 million settlement to resolve two cases: one alleging Ring doorbell devices illegally spied on users and the other alleging Alexa smart speakers illegally collected data about children. Fortunately for Jeff Bezos and Andy Jassy, their new nemesis has an eminently curse-able name.