Background on the Case
A U.S. court began hearing against e-commerce giant Amazon, accused of using deceptive practices to sell millions of Prime subscriptions and making cancellation nearly impossible. The lawsuit, filed in June 2023, by the Federal Trade Commission (FTC), claims Amazon employed “dark patterns” to mislead customers into subscribing to the annual $139 Prime service during checkout.
FTC’s Allegations
- Unclear Consent: The FTC alleges that Amazon signed up new customers without clear consent and used confusing payment processes.
- Complicated Cancellation: The company is accused of intentionally creating a convoluted cancellation system, internally known as “Ilíada,” referencing Homer’s epic poem about the Trojan War.
- Misleading Interface: The payment process reportedly forced customers to navigate confusing interfaces, with opting out of Prime requiring finding small, unnoticed links. In contrast, subscribing to the service was facilitated by prominent buttons.
Amazon’s Defense
Amazon maintains that it has improved its sign-up and cancellation processes for Prime and that the accusations are outdated. If convicted, the company faces substantial financial penalties and may need to alter its subscription practices.
Judge’s Preliminary Ruling
Presiding Judge John Chun ruled last week that Amazon violated an online consumer protection law by collecting billing information from Prime subscribers before disclosing service terms, according to shared court excerpts.
Prime Subscription Impact
The FTC’s complaint states that Prime subscriptions generated $25 billion in annual revenue for Amazon, as per the 2023 accusation file.
Amazon’s Legal Strategy
Amazon’s primary defense will argue that the law and other regulations do not explicitly prohibit the disputed practices, and that the FTC has overstepped its boundaries.
Key Questions and Answers
- What is the case about? The EU tribunal is hearing a case against Amazon for allegedly using deceptive practices to sell Prime subscriptions and making cancellation difficult.
- Who filed the lawsuit? The Federal Trade Commission (FTC) filed the case in June 2023.
- What are the FTC’s allegations? The FTC claims Amazon used “dark patterns” to mislead customers, signed up new subscribers without clear consent, and created a complicated cancellation system.
- What is Amazon’s defense? Amazon asserts it has improved its processes and that the accusations are outdated.
- What are the potential consequences for Amazon? If convicted, Amazon may face heavy fines and be required to change its subscription practices.
- What percentage of Amazon’s revenue do Prime subscriptions represent? Prime subscriptions accounted for $25 billion in Amazon’s annual revenue, as per the 2023 accusation file.
