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Amazon And the Federal Trade Commission has squared its long-awaited trial over whether the company has imposed users on Prime membership payments.
The lawsuit filed by the FTC under the Biden administration in June 2023 alleges that Amazon has blocked attempts to sign up for its prime subscription program to tens of millions of customers and cancel it. Amazon has denied fraud.
The trial is being held in Seattle’s federal courthouse, Amazon’s backyard. The ju judge’s choice begins on Monday, with opening discussions scheduled for Tuesday, and the trial is expected to last for about a month.
Launched in 2005, Amazon’s Prime program has become one of the world’s most popular subscription services, with over 2000 million members generating billions of dollars worldwide. Membership costs $139 per year and includes perks such as free shipping and access to streaming content. Data shows that Prime members shop more frequently than non-Prime members.
Amazon founder and executive chairman Jeff Bezos famously states that the company wants Prime “to be very good value.”
Regulators claim that Amazon has broken competition and consumer protection laws by suppressing customers’ subscriptions to Prime. They pointed out examples like buttons on sites that told users to complete the transaction and did not explicitly state that they agreed to join Prime for repeated subscriptions.
“Millions of consumers mistakenly registered with Prime without knowledge or consent, but Amazon refused to fix this known issue, which has been internally described as “implicit cancer” by employees, as clear adjustments lead to a decline in subscribers,” the agency filed in court last week.
The FTC says the cancellation process is equally confusing, with users having to navigate through four web pages and choose from 15 options.
Amazon claims Prime’s sign-up and cancellation process is “clear and simple,” adding that the company is “always transparent about Prime terminology.”
“The occasional customer complaints and mistakes are inevitable, especially for programs that are as popular as Amazon Prime,” the company wrote in a recent court filing. “The evidence that a small portion of our customers misunderstood major registration or cancellations does not prove that Amazon has violated the law.”
“Dark Pattern” crackdown
The FTC won an early victory last week in a case in which U.S. District Judge John Chun ruled Amazon and two senior executives violated the Restoration of Online Shoppers Act, collecting claim information from Prime members before revealing terms of service.
Chun also said that the two senior Amazon executives will be individually responsible for the level of oversight they maintained for the main registration and cancellation process, in the case of the FTC ry appraiser.
Amazon Prime bosses Jamil Ghani and Neil Lindsay are senior vice presidents of the health department who previously oversaw Prime’s technology and business operations, and have been appointed defendants in the complaint.
Russell Grandinetti, Amazon’s senior vice president of international consumers, has also been appointed in the lawsuit, but Chun claimed that he has “less involvement in the operation of the Prime organization” compared to Ghani and Lindsay.
Chun also scolded Amazon’s lawyers in July for withholding thousands of documents from the FTC and abused legal privileges to abuse legal privileges. Inside the document is an email from 2020, with Amazon’s retail manager Doug Herrington calling “subscription driving” a “shady” practice and calling Bezos the company’s “Chief Dark Arts Officer.”
An Amazon representative did not immediately respond to requests for comment.
Amazon is also facing another lawsuit in 2023 accusing the FTC of waving illegal monopoly. The case is scheduled to go to court in February 2027.
The main case is part of the FTC’s wider crackdown on the so-called “dark patterns” that began its investigation in 2022. This phrase refers to deceptive design tactics aimed at guiding users to purchase products or services or abandoning privacy.
The agency filed a similar dark pattern of lawsuit Uber In April, the ride and delivery company condemned the deceptive claims and cancellation practices associated with its Uber one subscription service. Uber is challenging the FTC allegations.
Earlier this year, it reached the settlement with an online dating service Match and online education companies chegg Their subscription practices claim to be deceptive or difficult to cancel.
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