WASHINGTON, June 21 (Reuters) – The US Federal Trade Commission accused Amazon.com (AMZN.O) on Wednesday of making it difficult for millions of consumers to sign up for and cancel their paid subscription Amazon Prime service without their consent. I did. The latest action against the e-commerce giant in recent weeks.
The FTC sued Amazon in federal court in Seattle, claiming that Amazon “deliberately tricked millions of consumers into signing up for Amazon Prime.” In a statement, Amazon called the FTC’s claims “false to the point of fact and law.”
Seeking civil penalties and a permanent injunction to prevent future violations, the FTC said Amazon used manipulative, coercive or deceptive user interface designs known as “dark patterns” to trick consumers into signing up for auto-renewing Prime subscriptions. .
The lawsuit is one of several actions taken by the Joe Biden administration to curb the huge market power of big tech companies seeking to increase competition to protect consumers.
The FTC said Amazon Prime is the world’s largest subscription program, generating $25 billion in annual revenue. Fast free shipping on millions of items, a range of discounts, access to movies, music and TV series, and other benefits.
Prime members in the US pay $139 per year and represent a significant portion of Amazon’s sales. With more than 200 million members worldwide, Prime is vital to Amazon’s other businesses, including its streaming service Prime Video and its grocery delivery service.
“It’s true that our customers love Prime, and we’ve designed it to be clear and simple for our customers to sign up for or cancel their Prime membership,” Amazon said in a statement.
Amazon added, “We are concerned that the FTC announced this lawsuit without notice to us before we were able to speak while the FTC was discussing with FTC staff to understand the facts, context and legal issues.” with the members.”
Wednesday’s lawsuit comes the same day Amazon announced the July date for its main sales event, Prime Day.
The suit said Amazon changed its cancellation procedures in April after significant pressure from the FTC, but that “violations are pending” and that “consumers would have to click five times on desktop and six times on mobile to cancel on Amazon.com.”
Amazon shares rose 0.2% in afternoon trading.
The FTC is investigating the process of joining and canceling the Prime program starting in March 2021.
According to the complaint, consumers who attempted to cancel Prime were faced with multiple maze steps to accomplish the cancellation task. According to the FTC complaint, Amazon said it used the term “Iliad flow,” referring to Homer’s epic about the lengthy Trojan War, to describe the process, which began in 2016.
Amazon also committed “deliberate misconduct” to delay the FTC’s investigation by providing “insincere” answers to requests for documents, the agency said.
Insider Intelligence senior analyst Evelyn Mitchell-Wolf said, “While the FTC is setting an example for Amazon, it is common for businesses to make it harder to cancel an account than it is to create one.”
“Amazon’s market dominance could work against them in this case,” Mitchell-Wolf said. The FTC will have a hard time proving that consumers are actually harmed even if Amazon interferes with Amazon’s ability to exercise its Prime membership cancellation option, Mitchell-Wolf said. Because it won’t go through,” he added. .
The FTC announced a $5.8 million settlement for Amazon’s Ring doorbell camera device on May 31 after it said the cameras were used to spy on some customers. The same day, the FTC said it had agreed to pay $25 million to settle allegations that Amazon violated children’s privacy rights by not deleting Alexa virtual assistant technology recordings at the request of parents and keeping them longer than necessary.
According to Tom Forte, managing director of DA Davidson Companies, the new lawsuit “is a symbol of the efforts of governments around the world to curb the undue influence of Big Tech,” including Amazon, Apple and Meta.
But Forte also pointed out other retailers and subscription services that make ending memberships difficult.
Reporting by David Shepardson and Chris Sanders of Washington; Additional reporting by Arriana McLymore; Edited by Will Dunham
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