Amazon accused of tricking customers into buying Prime subscription, to go under trial next month
The Federal Trade Commission (FTC) is suing Amazon, accusing the e-commerce giant of misleading millions of customers into signing up for Prime subscription and making it difficult for them to cancel. According to a Gizmodo report, the trial is expected to last a month and is Amazon’s first major legal battle with the FTC.
What is Amazon accused of
The report quotes a court filing from earlier this month in which the FTC said: “Millions of consumers accidentally enrolled in Prime without knowledge or consent, but Amazon refused to fix this known problem, described internally by employees as an ‘unspoken cancer’ because clarity adjustments would lead to a drop in subscribers.”
The agency also said the cancellation process, known inside Amazon as “Iliad,” was a deliberate maze: “Prime’s cancellation flow … is a labyrinthian mechanism that Defendants know deters consumers from cancelling or misleads consumers into believing they successfully cancelled Prime when they in fact did not.”
The lawsuit, filed two years ago under FTC chair Lina Khan, accuses Amazon and three executives—Jamil Ghani, Neil Lindsay, and Russell Grandinetti—of rolling back fixes that made enrollment clearer because subscriptions dropped. A federal judge has already ruled that two of them could be held personally liable if Amazon loses.
What Amazon says
Amazon has denied wrongdoing. “The bottom line is that neither Amazon nor the individual defendants did anything wrong – we remain confident that the facts will show these executives acted properly and we always put customers first,” a spokesperson said.
The FTC argues Amazon used “dark patterns,” or design tactics meant to manipulate users into signing up or stopping them from cancelling. Regulators say such practices violate U.S. consumer protection laws.
Prime generated more than $44 billion in subscription revenue for Amazon last year, making the outcome of this case significant not just for Amazon but for other subscription-based businesses that rely on similar practices.
What is Amazon accused of
The report quotes a court filing from earlier this month in which the FTC said: “Millions of consumers accidentally enrolled in Prime without knowledge or consent, but Amazon refused to fix this known problem, described internally by employees as an ‘unspoken cancer’ because clarity adjustments would lead to a drop in subscribers.”
The agency also said the cancellation process, known inside Amazon as “Iliad,” was a deliberate maze: “Prime’s cancellation flow … is a labyrinthian mechanism that Defendants know deters consumers from cancelling or misleads consumers into believing they successfully cancelled Prime when they in fact did not.”
The lawsuit, filed two years ago under FTC chair Lina Khan, accuses Amazon and three executives—Jamil Ghani, Neil Lindsay, and Russell Grandinetti—of rolling back fixes that made enrollment clearer because subscriptions dropped. A federal judge has already ruled that two of them could be held personally liable if Amazon loses.
What Amazon says
Amazon has denied wrongdoing. “The bottom line is that neither Amazon nor the individual defendants did anything wrong – we remain confident that the facts will show these executives acted properly and we always put customers first,” a spokesperson said.
The FTC argues Amazon used “dark patterns,” or design tactics meant to manipulate users into signing up or stopping them from cancelling. Regulators say such practices violate U.S. consumer protection laws.
Prime generated more than $44 billion in subscription revenue for Amazon last year, making the outcome of this case significant not just for Amazon but for other subscription-based businesses that rely on similar practices.
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