FTC Sues Amazon for Deceptive Tactics | July 2023
The FTC says Amazon is roping in customers with an easy signup process but then retaining them with a deceptive design that makes cancellations exceptionally difficult.
According to the Federal Trade Commission (FTC), Amazon tricked customers into Prime subscriptions and made cancelations difficult. Amazon Prime is a membership service ($139 annually) that offers fast shipping, streaming entertainment, shopping benefits, and reading perks. Presently, Amazon has more than 200 million paid members. The FTC says Amazon is roping in customers with an easy signup process but then retaining them with deceptive design.
What is the FTC?
The Federal Trade Commission (FTC) greatly influences business activities related to questionable business practices and consumer protection. The FTC regulates a wide variety of business practices, but it particularly focuses on anticompetitive business practices and consumer protection.
Inside the FTC’s Complaint
The FTC began an investigation into Amazon’s business practices in March 2021. According to the FTC’s complaint, Amazon “tricked and trapped” customers into subscriptions without their consent. It says the platform’s user interface was designed using dark patterns that are intentionally manipulative, coercive, or deceptive to lure users into renewing their Prime membership automatically.
The FTC paints a picture of Amazon luring customers in and then trapping them. According to the FTC, Amazon delayed or threw out changes to its platform that would have made cancelation easier since this would affect Amazon’s profit. Signing up for Prime requires just a few clicks or taps, but cancellation requires many more. The FTC says this convoluted cancellation process is internally dubbed the “Iliad Flow” in reference to the Greek epic poem by Homer.
The commission is seeking monetary civil penalties. In a similar case of using dark patterns in design, Vonage, a telecommunications company, reached a $100 settlement with the FTC after the commission accused the company of making it too difficult for customers to cancel their services and charged surprise cancelations fees.
Amazon’s Response
Amazon insists the allegations are untrue and says the cancelation process is both clear and simple. The FTC typically discusses concerns with a company before taking enforcement action, but Amazon says the FTC skipped this step. Amazon says it will prove itself in court.
In the Classroom
This article can be used to discuss deceptive communication, consumer relations, and the Federal Trade Commission (Chapter 2: Business Ethics and Social Responsibility).
Discussion Questions
- What is the Federal Trade Commission?
- How was Amazon deceptive according to the FTC?
- Why are dark patterns a threat to consumers?
This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.
Sources
Alina Selyukh, "FTC Sues Amazon for 'Tricking and Trapping' People in Prime Subscriptions," NPR, June 21, 2023, https://www.npr.org/2023/06/21/1183470389/ftc-sues-amazon-over-prime
Jan Wolfe and Dave Michaels, "FTC Sues Amazon Over ‘Manipulative’ Tactics Used to Enroll Millions in Prime," The Wall Street Journal, June 21, 2023, https://www.wsj.com/articles/ftc-sues-amazon-over-manipulative-tactics-to-enroll-users-in-premium-service-85400564
Makena Kelly, "FTC Sues Amazon for Tricking Customers into Signing up For Prime," The Verge, June 21, 2023, https://www.theverge.com/2023/6/21/23768372/ftc-amazon-lawsuit-prime-dark-patterns-subscriptions
O.C. Ferrell is the James T. Pursell Sr. Eminent Scholar in Ethics and Director of the Center for Ethical Organizational Cultures in the Raymond J. Harbert College of Business, Auburn University. He was formerly Distinguished Professor of Leadership and Business Ethics at Belmont University and University Distinguished Professor at the University of New Mexico. He has also been on the faculties of the University of Wyoming, Colorado State University, University of Memphis, Texas A&M University, Illinois State University, and Southern Illinois University. He received his Ph.D. in marketing from Louisiana State University.
