The U.S. Federal Trade Commission accused Amazon.com (AMZN.O) on Wednesday of enrolling millions of users onto its paid subscription, Amazon Prime service, without their knowledge and making it difficult to withdraw.

The FTC sued Amazon in Seattle federal court, charging that the business “knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime.” Amazon said the FTC’s accusations were “false on the facts and the law.”

Amazon utilized “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions,” the FTC stated, seeking civil penalties and a permanent injunction to prevent future violations.
President Joe Biden’s administration has taken many steps to limit Big Tech’s market dominance to safeguard consumers, including the lawsuit.

Amazon Prime earns $25 billion yearly, according to the FTC. It offers fast, free shipping on millions of things, savings, access to movies, music, and T.V. shows, and other benefits.

$139-a-year U.S. Prime customers drive Amazon’s sales. Amazon’s grocery delivery and streaming services depend on Prime, which has over 200 million members.

“The truth is that customers love Prime,” Amazon stated. “By design we make it clear and simple for customers to both sign up for or cancel their Prime membership.”
Amazon said, “it concerning that the FTC announced this lawsuit without notice to us, amid our discussions with FTC staff members to ensure they understand the facts, context, and legal issues, and before we were able to have a dialog with the commissioners themselves.”

Wednesday’s lawsuit followed Amazon’s Prime Day announcement for July.

According to the lawsuit, Amazon altered its cancellation process in April under FTC pressure, but “violations are ongoing,” and it still “requires five clicks on desktop and six on mobile for consumers to cancel from Amazon.com.”

Amazon’s afternoon shares rose 0.2%. Since March 2021, the FTC has investigated Prime sign-up and cancellations.

According to the lawsuit, Prime cancellation required numerous complicated steps. Amazon’s 2016 “Iliad Flow” method was compared to Homer’s epic poem about the Trojan War by the FTC.

The agency concluded that Amazon’s “bad faith” responses to FTC document demands were “intentional misconduct” to delay the inquiry.

According to Insider Intelligence senior analyst Evelyn Mitchell-Wolf, the “FTC is making an example of Amazon, but it’s quite common for companies to make it more difficult to cancel an account than to create one.”

“Amazon’s market power might work against it in this instance, as the FTC won’t have a hard time proving that consumers are, indeed, harmed if Amazon impedes their ability to exercise their choice to cancel their Prime membership,” Mitchell-Wolf said.

After accusing Amazon’s Ring doorbell camera company of eavesdropping on customers, the FTC settled for $5.8 million on May 31. The FTC announced that Amazon would pay $25 million to settle charges that it violated children’s privacy rights by failing to remove Alexa virtual assistant technology recordings at parents’ requests and retaining them longer than necessary.

Tom Forte, managing director at D.A. Davidson Companies, called the lawsuit “emblematic of efforts by governments across the globe to rein in the excess influence of big tech,” including Amazon, Apple, and Meta.

Forte also mentioned other merchants and subscription services that make canceling memberships tough.