Amazon duped consumers into buying Amazon Prime, FTC claims

The Federal Trade Commission (FTC) is targeting Amazon in a complaint alleging that the e-commerce giant duped millions of consumers into unknowingly enrolling in Amazon Prime subscriptions while also sabotaging their attempts to leave the service using an array of "cancellation trickery."

Among specifics, the Commission alleges that Amazon used manipulative, coercive or deceptive user-interface designs known as "dark patterns" to trick consumers into enrolling in or automatically renewing Prime subscriptions.

The FTC also claims that Amazon made it difficult for consumers to cancel their Prime memberships, which cost $14.99 per month or $139 per year and bundle in perks such as fast deliveries on purchased products and access to the Prime Video streaming service.

Specific counts in the complaint include unfairly charging consumers without consent, failing to adequately disclose material terms of Prime (including pricing and auto-renewals and cancellations processes) and a failure to provide a simple cancellation mechanism.

'Nonconsensual enrollment'

The redacted 159-page complaint (PDF), filed in the US District Court for the Western District of Washington, holds that the "nonconsensual enrollment" issue was well known within Amazon.

Amazon employees, the FTC claimed, pushed several executives responsible for Prime, including Neil Lindsay, Russell Grandinetti and Jamil Ghani, to address nonconsensual enrollment and to make changes that would ensure that Amazon would not trick customers into signing up for Prime.

Amazon leadership, including those three execs, "slowed, avoided, and even undid user experience changes that they knew would reduce Nonconsensual Enrollment because those changes would also negatively affect Amazon's bottom line," the FTC alleged.

The 'Iliad Flow'

The FTC cites a report that Amazon used the term "Iliad" – an homage to Homer's epic poem – to describe a process that makes it difficult for consumers to cancel Prime.

Dubbed the "Iliad Flow," the FTC said this "complex and confusing" process requires consumers to go through multiple steps to cancel, and that many consumers end up being redirected to other pages that present other offers or to continue their Prime subscription at a discount or take them to a page where they can simply turn off the auto-renew feature.

The FTC also claims Amazon capitalized on consumer confusion between Prime and Prime Video, causing some consumers to unknowingly enroll in the more expensive Prime service.

The FTC also alleges that Amazon "attempted to delay and hinder the Commission's investigation in multiple instances." Of note, the FTC held that Amazon, which launched the Iliad Flow in 2016, didn't substantially change it in the US in or about April 2023. That revamp was implemented shortly before the Commission filed the complaint, the FTC said.

"Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money," FTC Chair Lina M. Khan said in a statement. "These manipulative tactics harm consumers and law-abiding businesses alike. The FTC will continue to vigorously protect Americans from 'dark patterns' and other unfair or deceptive practices in digital markets."

Amazon's blistering response

Amazon denied any wrongdoing and claims it was not heard out before the complaint was filed.

"The FTC's claims are false on the facts and the law. The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership. As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the facts becoming clear as this case plays out," Amazon said in an emailed statement.

Amazon continued: "We also find it concerning that the FTC announced this lawsuit without notice to us, in the midst of our discussions with FTC staff members to ensure they understand the facts, context, and legal issues, and before we were able to have a dialog with the Commissioners themselves before they filed a lawsuit. While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court."

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— Jeff Baumgartner, Senior Editor, Light Reading