FTC Amazon Prime Subscription Class Action
Photo Credit: Unsplash | Updated: March 9, 2024
Claim Form Deadline: Ongoing
Estimated Payout: Varies
FTC Sues Amazon Over Duplicitous Amazon Prime Subscription Practices
The Federal Trade Commission (FTC) filed a 159 page complaint against Amazon.com, Inc. ("Amazon"), alleging violations of the Federal Trade Commission (FTC) Act and the Restore Online Shoppers' Confidence Act (ROSCA). The FTC asserted that Amazon has violated a multitude of consumer laws including the FTC Act, as well as Section 4 of ROSCA - Restore Online Shoppers' Confidence Act.The crux of the FTC's case revolved around Amazon's alleged use of manipulative tactics to enroll consumers in its Amazon Prime service without their consent. The FTC contended that Amazon employed deceptive user-interface designs, often referred to as "dark patterns," to trick consumers into unknowingly signing up for automatically-renewing Prime subscriptions.
Internal documents revealed that Amazon was aware of the issue of nonconsensual enrollment within its Prime service. Despite internal discussions and pushback from some employees urging changes to address the problem, Amazon's leadership allegedly slowed or rejected proposed user experience modifications, fearing negative impacts on the company's bottom line.
The complaint highlighted Amazon's complex and labyrinthine cancellation process for Prime subscribers, known as the "Iliad Flow." This cancellation process was reportedly designed to impede subscribers' attempts to end their memberships, with the primary goal of retaining them as Prime subscribers.
Amazon's upsell tactics during the checkout process, both on desktop and mobile devices, were scrutinized by the FTC. The complaint detailed how Amazon strategically placed prompts and buttons to enroll consumers in Prime subscriptions, often without adequately disclosing the terms or pricing of the memberships.
Overall, the FTC accused Amazon of prioritizing its financial interests over the rights and preferences of consumers, alleging that the company knowingly employed deceptive practices to drive Prime subscription numbers and maximize revenue.
The FTC settlement sought permanent injunctive relief, restitution, civil penalties, and other equitable relief for Amazon's alleged violations of consumer protection laws. It underscored the importance of holding companies accountable for unfair or deceptive acts or practices that affect consumers' rights and choices in the marketplace.
In light of the latest developments regarding the Federal Trade Commission's lawsuit against Amazon, it's evident that the legal proceedings are anticipated to be protracted, and there exists substantial disagreement between the involved parties. Notably, the FTC has requested the court to set a trial commencement deadline for May 2026, whereas Amazon has proposed a start date in December 2026. The extensive duration is attributed to the immense volume of information involved, estimated to exceed 100 terabytes, equivalent to approximately 50 million pages.
The core contention revolves around differing perspectives: the FTC contends that Amazon's purported monopolistic practices detrimentally impact consumers, whereas Amazon asserts that its strategies lead to lower prices for consumers. Disagreements extend to procedural matters, with the FTC seeking to depose over 100 Amazon witnesses, in contrast to Amazon's preference for a limit of 10. Moreover, allegations of document destruction by Amazon are contested, with the company denying any illegal actions. Amazon argues that its business practices are commonplace in the retail sector, a stance disputed by the FTC. Additionally, Amazon seeks to exclude Project Nessie, an algorithm discontinued in 2019, from the lawsuit, despite its significant role in the FTC's claims.
Presumably, the FTC aims to compel Amazon to cease the practices under scrutiny. If successful, the lawsuit could lead to regulatory requirements, as well as seeking damages or penalties either in the form of a cash settlement to states, or directly to consumers via a massive Amazon class action settlement payout structure.
Previously, the FTC sued Meta Platforms over privacy concerns for a monumental consumer privacy settlement. Facebook, Inc. found itself at the center of a groundbreaking agreement with the Federal Trade Commission (FTC), setting a new precedent in privacy enforcement actions. The tech giant agreed to pay the record-breaking $5 billion penalty, marking the largest-ever fine imposed on any company for violations of consumer privacy. This historic settlement stemmed from charges that Facebook had violated a 2012 FTC order by deceiving users about their control over the privacy of their personal information.
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