FTC sues Amazon over Prime sign-up and cancellation process

FTC sues Amazon over Prime sign-up and cancellation process

The Federal Trade Commission on Wednesday sued Amazon, alleging the e-commerce behemoth illegally deceived customers into signing up for its Prime program and then “sabotaged” their attempts to cancel.

The federal agency claims Amazon violated the FTC Act and the Restore Online Shoppers’ Confidence Act by using deceptive tactics — known as “dark patterns” — that pushed customers to enroll in a Prime membership without their permission, according to its statement.

The complaint said the option to purchase items on Amazon without enrolling in Prime was more difficult than simply purchasing without subscribing, the outlet reported.

“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.

Founded in 2005, an Amazon Prime membership gives customers free two-day shipping, plus music and video streaming and other exclusive perks for $14.99 per month — or $139 for the year if paid upfront.

There are an estimated 200 million Amazon Prime members around the world — 150 million of which are based in the US.


The FTC filed a suit on Wednesday claiming Amazon used “dark patterns” that pushed customers to enroll in a Prime membership without their consent — and then purposefully made it difficult for subscribers to cancel their membership.
AP

Amazon Prime subscription fees contribute about $25 billion to the company’s annual revenue, which was $514 billion in 2022.

The lawsuit was filed in the US District Court for the Western District of Washington more than two years after the FTC opened its investigation of Amazon’s sign-up and cancellation processes.

It claims Amazon’s leadership slowed down or rejected changes to Amazon’s interface that would have made it easier for Prime members to cancel their membership.

It also said that, at times, customers were presented with a button to complete their transactions, though it was unclear if clicking simultaneously enrolled them in Prime.

These things “adversely affected Amazon’s bottom line,” the complaint says.

Khan is now claiming the agency has “a number of allegations” that back up its most recent complaint against Amazon, which also alleges the Seattle-based company attempted to delay the FTC’s investigation.

As part of the probe, Khan, 34, issued an order back in September on behalf of the FTC, which required Amazon owner Jeff Bezos and CEO Andy Jassy to testify on the company’s Prime practices.

Representatives for the FTC and Amazon did not immediately respond to The Post’s request for comment.


The FTC's effort is spearheaded by the agency's chair, Lina Khan, who has publicly criticized Big Tech.
The FTC’s effort is spearheaded by the agency’s chair, Lina Khan, who has publicly criticized Big Tech.
REUTERS

Khan has been a fierce critic of the likes of Amazon, Meta and Apple since the federal agency named her chair last June.

Amazon had previously asked Khan to step down from her position in a separate antitrust investivation into its e-commerce business which was unsuccessful.

Amazon had cited her public distaste of Big Tech before her position at the regulatory agency, when she penned a study titled “Amazon’s Antitrust Paradox” in 2017 while she was a law student at Yale University.

Earlier this month, the FTC announced that it had reached a $5.8 million settlement with Amazon over privacy violations after a former employee of the tech giant’s Ring doorbell camera unit spied for months on female customers in 2017 with cameras placed in bedrooms and bathrooms.

Amazon also agreed to pay $25 million to settle allegations it violated children’s privacy rights when it failed to delete Alexa recordings at the request of parents and kept them longer than necessary, according to a court filing in federal court in Seattle that outlined a separate settlement.

The FTC settlements are the agency’s latest effort to hold Big Tech accountable for policies that critics say place profits from data collection ahead of privacy.


Source by [New York Post]

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