The US Federal Trade Commission (FTC) filed a lawsuit against Amazon on Wednesday (June 21) and accused the e-commerce giant of enrolling millions of people on Amazon Prime, its paid subscription, without consent and making it hard to cancel the membership. The lawsuit has been filed in a court in Seattle. It alleges that “Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime”.
The FTC said Amazon used “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions.”
Once a customer opts for Amazon Prime, he can avail of free shipping on millions of products and can get discounts, besides access to Amazon’s movies and music streaming services.
In the US, Prime members pay USD 139 per year. This drives much of Amazon’s sales volume. Across the world, Prime has more than 200 million members.
The FTC said Amazon generates $25 billion in revenue from Prime subscriptions annually and that “one of Amazon’s primary business goals – and the primary business goal of Prime – is increasing subscriber numbers.”
According to the lawsuit, Amazon changed its cancellation process in April under immense pressure from the FTC but “violations are ongoing”.
The watchdog is seeking civil penalties and permanent injunctions to prevent future violations.
Reuters said that there was no immediate comment from the company.
The FTC has been investigating sign-up and cancellation processes for the Prime program since March 2021.
“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.
According to the complaint, customers who tried to cancel their Prime membership were faced with multiple steps to actually accomplish the task of cancelling. The complaint further said that Amazon used the term “Iliad Flow” to describe the process, referencing Homer’s epic poem about the lengthy Trojan War.
Lawsuit against Google
The lawsuit against Amazon came just a day after a separate lawsuit against search-giant Google. Gannett, the largest newspaper publisher in the US and publisher of USA Today, filed a complaint against Google in a New York court accusing it of trying to monopolise the digital advertising market.
The publishing giant has thus alleged that Google reaps “exorbitant monopoly profits” while leaving publishers with “dramatically less revenue”.
“Digital advertising is the lifeblood of the online economy,” Gannett Chief Executive Mike Reed said in an opinion published in USA Today. “Without free and fair competition for digital ad space, publishers cannot invest in their newsrooms.”
Dan Taylor, vice president of Google Ads replied, “These claims are simply wrong.” In a statement quoted by AFP, Taylor said that publishers have many options for advertising tech and that “they keep the vast majority of revenue” when they use Google.
(With inputs from agencies)
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