FTC Sues Amazon Over ‘Deceptive’ Prime Sign-Up and Cancellation Process
Last week, the Federal Trade Commission (FTC) sued Amazon.com, alleging the nation’s leading online retailer intentionally duped millions of consumers into signing up for its paid loyalty Prime program and “sabotaged” their attempts to cancel. The agency claims Amazon violated the FTC Act and the Restore Online Shoppers’ Confidence Act by using so-called dark patterns, or deceptive design tactics meant to steer users toward a specific choice, to push consumers to enroll in Prime without their consent. The FTC had been investigating sign-up and cancellation processes for Amazon’s Prime program since March 2021.
Total Retail's Take: Prime is the standard bearer for premium loyalty programs in the retail industry. It delivers multiple benefits to Amazon, including a consistent revenue stream thanks to its $139 annual membership fee (or $14.99 per month), as well as higher lifetime values for Prime members, who have shown a propensity to shop more frequently and spend more when they do when compared to non-Prime members. However, like many other subscription-based programs, consumers have voiced their concerns over how challenging it was to cancel membership in the loyalty program. In fact, the FTC's lawsuit accuses Amazon's leadership of slowing or rejecting changes that would have made it easier for users to cancel Prime because those changes “adversely affected Amazon’s bottom line.”
For its part, Amazon spokesperson Heather Layman said in a statement that the FTC’s claims are “false on the facts and the law.” It will now be up to a judge in the U.S. District Court for the Western District of Washington to decide if Amazon is liable or not.