The case beginning Monday alleges that Amazon deceived consumers about its sign-up and cancellation process for Prime benefits in violation of Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), which requires sellers to get consumers’ informed consent to charge them. The FTC alleges that Amazon used design tricks known as dark patterns to get users to sign up for Prime even when they might not have wanted to or without realizing what they were getting into. Once locked into a recurring subscription, the FTC alleges, Amazon made it difficult for users to cancel, and slow-rolled changes that would have made it easier for customers to do so, but cost Amazon revenue.
Amazon executives could be held personally liable for violations if the FTC is able to prove them during the trial
The government already won a significant ruling last week from Judge John Chun, who found on summary judgement that Amazon violated ROSCA by collecting customers’ billing information before disclosing the material terms of the Prime membership. Chun also ruled that two Amazon executives could be held personally liable for violations if the FTC is able to prove them during the trial. Chun earlier admonished Amazon for withholding documents from the FTC in a way that was “tantamount to bad faith.”
Amazon has denied it violated the law, with spokesperson Heather Layman calling the claims “false on the facts and the law” when it was filed in 2023. “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.” The company agreed to simplify its Prime cancellation process in Europe in 2022 in response to pressure from regulators there.
Going after recurring subscription fees has been a popular tactic among both Republicans and Democrats. Lina Khan, who ran the FTC during the Biden administration, championed the click-to-cancel rule to make it as easy to cancel a membership as sign up, but it was struck down by an appeals court before taking effect. Current FTC Chair Andrew Ferguson opposed the rule as a commissioner, but the agency has continued the Amazon suit brought under Khan, and filed a new lawsuit against Uber for allegedly making it difficult to cancel its Uber One food/grocery/rideshare discount subscription.