FTC Sues Amazon Over 'Manipulative' Tactics to Enroll Consumers in Amazon Prime Service

The Federal Trade Commission sued Amazon.com on Wednesday, alleging the retail giant worked for years to enroll consumers without consent into Amazon Prime and made it difficult to cancel their subscriptions to the program.

The FTC's complaint, filed in federal court in Seattle, alleged that Amazon has duped millions of consumers into enrolling in Amazon Prime, a recurring $139 annual subscription service with more than 200 million members worldwide that has helped Amazon become an integral part of many American households' shopping habits.

The complaint is the culmination of an investigation that began in March 2021.

An Amazon spokesman dismissed the FTC's allegations as "false on the facts and the law."

The complaint alleged that Amazon used "manipulative, coercive, or deceptive user interface designs known as dark patterns" to dupe users into automatically renewing Prime subscriptions.

The FTC has been examining the use of dark patterns in online commerce for several years.

For years, Amazon made it easy to enroll in Prime with one or two clicks, but created a "four-page, six-click, fifteen-option cancellation process,” the FTC said. The agency said the procedure was designed to make it cumbersome and confusing for customers to cancel Prime.

Amazon revamped its Prime cancellation process for some subscribers in April, shortly before the FTC filed the case, according to the complaint. Amazon knew its policies were "legally indefensible," the agency alleged.

Amazon said the FTC filed the lawsuit without allowing the company to explain to the agency's three commissioners why it shouldn't be sued, bypassing a step that is typically part of the process for companies facing an enforcement action.

Amazon Prime, established in 2005, gives members access to free two-day shipping, plus extra privileges like music and video streaming and photo storage. The company periodically adds new benefits to the paid program, making its customer base stickier and deepening their ties to Amazon. Last year it added Grubhub to the suite of Prime services, waiving delivery fees for members who use the food-delivery service. The free and fast shipping benefit has been a bedrock of Prime's growth and enabled the company to invest in other services.

JPMorgan analysts estimated in June 2022 that a Prime subscription would cost $1,100 a year if its included benefits were sold separately. JPMorgan estimated at the time that Prime would have 270 million members around the world by the end of 2022.

About 72% of all U.S. households, or 96 million, have a paid Prime membership, according to recent estimates from market research firm Insider Intelligence.

The FTC is separately preparing a potential antitrust lawsuit against Amazon to be filed in the coming months that could challenge an array of the tech giant's business practices as anticompetitive, The Wall Street Journal reported in February.

The commission in recent years has been examining Amazon practices including whether it favors its own products over competitors' on its platforms and how it treats outside sellers on Amazon.com, according to people familiar with the matter. Enforcers also have examined whether Prime's bundling of services violates any antitrust laws.