FTC Sues Amazon Over Tricking Users Into Signing Up for Prime

The Federal Trade Commission sued Amazon on Wednesday for tricking customers into signing up for its Prime service, and subsequently making it very difficult to cancel their membership. This is the third major action the FTC has taken against the company this year. 

The lawsuit, filed in the Western District Court of Washington, alleges that Amazon “knowingly duped millions of consumers into unknowingly enrolling in its Amazon Prime service” and “used manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions.” Large parts of the lawsuit and many of the exhibits it references are redacted and have been filed under seal, suggesting that the FTC is relying in part on internal Amazon documentation.

The lawsuit continues to allege that Amazon also intentionally made the Prime cancellation process difficult, since Prime subscribers are “critical” to the company’s revenue stream—it states that “Prime subscription fees account for $25 billion of Amazon’s annual revenue…Consequently, one of Amazon’s primary business goals—and the primary business goal of Prime—is increasing subscriber numbers.”

“Under significant pressure from the Commission—and aware that its practices are legally indefensible—Amazon substantially revamped its Prime cancellation process for at least some subscribers shortly before the filing of this Complaint,” the lawsuit stated, referring to a Civil Investigative Demand (CID) filed by the FTC in March of 2021 asking about Prime’s enrollment and cancellation practices. The FTC later filed additional CIDs regarding Amazon Prime, at least one of which Amazon filed to quash. 

Earlier this year in April, the lawsuit says, Amazon updated its Prime cancellation process to be less arduous.

“However, prior to that time, the primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them,” it continued. “Fittingly, Amazon named that process ‘Iliad,’ which refers to Homer’s epic about the long, arduous Trojan War.” In March of 2022, Insider received internal documents showing that after Amazon implemented “Project Iliad,” Prime cancellations dropped by 14 percent.

The lawsuit describes “Iliad” as a “four-page, six-click, fifteen-option” process. In contrast, enrolling in Prime takes one or two clicks, it said. It then takes 11 pages to describe all possible options a customer might encounter when trying to cancel their membership. One button it references reads “End Membership.” That button, the lawsuit states, “did not end membership. Rather, it took the consumer to the Iliad Flow.” 

An Amazon spokesperson told Motherboard in an email that, “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.”

“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,” they continued. “While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court.”

This is the third major action taken by the FTC against Amazon this year. It previously sued the company’s home surveillance system product, Ring, for violating users’ privacy by failing to stop hackers. It has also sued Amazon’s home assistant program, Alexa, for violating childrens’ privacy laws.

Update: this article has been updated with comment from Amazon.