Locke Lord QuickStudy: FTC Takes Action Against Amazon for ‎Alleged Deceptive Prime Subscriptions

On June 21, 2023, the Federal Trade Commission (the “FTC” or the “Agency”) filed a complaint against Amazon for ‎multiple violations of the Restore Online Shoppers’ Confidence Act (ROSCA). The focus of the ‎FTC action alleges Amazon Prime subscription program employed methods to make it difficult ‎for consumers to cancel their Amazon Prime subscriptions. In the highly redacted, 150-page ‎complaint the FTC highlights how Amazon’s website was designed to deceptively enroll ‎consumers by offering multiple opportunities to subscribe to Prime while checking out or using ‎Amazon services like Prime video. The FTC alleges the formatting makes it more complicated to ‎reject the offer than to accept, with multiple actions required to reject but only one action to ‎instantly enroll in Prime. These offers typically included language about being a “free trial” ‎without disclosing that accepting the “free trial” would automatically re-enroll the user after the ‎first month at full price. This resulted in a large number of consumers enrolled in Prime without ‎knowledge or intent to be enrolled, a clear violation of ROSCA. The cancellation process for any ‎intentional or unintentional Prime members was purposefully designed to be difficult. Called the ‎‎“Iliad Flow” by Amazon in reference to Homer’s epic poem, the complex cancellation process ‎implemented in 2016 required users go through a four-page, six-click, fifteen-option process in ‎order to cancel their Prime subscription. The FTC alleges this process was intentionally designed ‎to prevent as many cancellations as possible. ‎

Based on these allegations, the FTC commenced an action against Amazon in the United States ‎District Court, Western District of Washington, alleging violation of ROSCA and obstruction of ‎the agency’s investigation which began in March 2021, when the FTC asked Amazon to turn ‎over relevant documents. According to the notice of the action included in the FTC’s business ‎blog, despite agreeing to provide the FTC with requested documents, Amazon produced only a ‎handful of documents. The FTC alleges it became readily apparent when leaked information was ‎published by Business Insider in March 2022 that Amazon was not forthcoming in responding to ‎the Agency’s requests until October 2022, almost 18 months later. The violations of ROSCA ‎alleged in the FTC’s Complaint include: unfairly charging consumers without consent, ‎inadequate disclosures, nonconsensual enrollment, and a failure to provide a simple cancellation ‎mechanism. The FTC is seeking a permanent injunction, monetary civil penalties for every ‎violation of ROSCA, and any additional relief granted by the court under ROSCA and the ‎Federal Trade Commission Act.‎