Updated June 21, 2023 at 3:08 PM ET
Federal regulators have sued Amazon, alleging the company for years "tricked" people into buying Prime memberships that were purposefully hard to cancel.
The Federal Trade Commission, in a legal complaint filed on Wednesday, says Amazon illegally used "manipulative, coercive, or deceptive" designs to enroll shoppers into auto-renewing Prime subscriptions. Regulators also accuse Amazon of purposefully building a convoluted, multi-step cancellation process to discourage people from quitting.
"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.
The Prime membership costs $139 a year or $14.99 a month, with perks including access to faster two-day shipping and video streaming. Prime subscribers tend to spend more on Amazon than other shoppers. According to the FTC, Prime membership fees account for $25 billion of the company's annual revenue.
In a statement, Amazon called FTC's accusations "false on the facts and the law." The company's response suggested that the lawsuit caught Amazon by surprise, as corporate representatives were in talks with FTC staff and expecting to meet with commissioners.
"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," Amazon's statement said. "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."
The lawsuit would be the first FTC case against Amazon to go to trial under the agency's firebrand chair. Khan's legal career had focused on reassessing the government's scrutiny of Big Tech, including Amazon. The retail giant at one point even pushed for the FTC to recuse Khan from any cases involving the company.
Amazon recently agreed to pay more than $30 million in fines to settle FTC's allegations of privacy violations involving its voice assistant Alexa and doorbell camera Ring.
In Wednesday's lawsuit, the FTC says Amazon's website used so-called dark patterns, or "manipulative design elements that trick users into making decisions they would not otherwise have made."
For example, the FTC describes the platform bombarding people with prominent options to sign up for Prime, while options to shop without Prime were harder to spot. In some cases, a button to complete the purchase did not clearly say that it would also enroll the shopper in Prime.
The FTC says once Amazon learned of the government investigation, the company began to address problems, but "violations are ongoing." The agency seeks monetary civil penalties without specifying a total amount.
The case is filed in federal court in Seattle, where Amazon is headquartered.
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