On Wednesday, the Federal Trade Commission (FTC) filed a lawsuit against Amazon, accusing the company of employing deceitful tactics to deceive millions of customers into enrolling in its Prime subscription service. According to the FTC, Amazon also made it more difficult for customers to cancel their subscriptions, all in an effort to boost sales.
The lawsuit, filed in the Western District of Washington, alleges that certain Amazon executives intentionally made it harder for consumers to opt out of renewing or signing up for Prime subscriptions because such changes would have a negative impact on the company’s profits.
FTC Chair Lina Khan stated, “Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money.” Khan emphasized that these manipulative tactics harm both consumers and law-abiding businesses.
The complaint against Amazon includes allegations of violating various laws, including the use of “dark patterns,” which are marketing techniques that manipulate consumers into making purchases or sharing their personal data without their knowledge.
In response to the lawsuit, Amazon issued a statement calling the FTC’s claims “false on the facts and the law.” The company asserts that it clearly and simply presents the terms of Prime membership to customers and allows them to easily sign up or cancel. Amazon also highlighted its commitment to listening to customer feedback and improving the overall customer experience.
Amazon’s statement expressed disappointment that the FTC announced the lawsuit without engaging in dialogue with the company’s staff or commissioners, despite ongoing discussions about the case. Amazon remains confident in its position and looks forward to presenting its case in court.
The FTC’s complaint emphasizes that Prime Membership contributes approximately $25 billion to Amazon’s annual revenue. The company’s leadership allegedly impeded changes to the membership interface that would have negatively affected sales. However, in recent months, Amazon modified its subscription cancellation process in response to pressure from the FTC.
This lawsuit is the third action taken by the FTC against Amazon this year. In a separate case, Amazon recently agreed to pay $25 million to settle allegations that its Alexa smart home device unlawfully collected data on children.
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The legal action by the FTC adds to a string of challenges faced by Amazon, including significant layoffs and the delayed opening of its second headquarters in Virginia. Although sales at top tech firms have slowed from the pandemic-driven surge, Amazon’s stock has seen a notable increase this year, partly due to optimism surrounding artificial intelligence.
Upon the announcement of the lawsuit, Amazon’s stock value experienced a slight decline in early trading on Wednesday.