‘Manipulative, deceptive’: Amazon sued for tricking users into subscribing to Prime

Amazon recently settled cases with the FTC that began before Khan’s tenure. The company agreed to pay $US25 million last month to settle commission claims that its Alexa home assistant devices had illegally collected children’s data. The company also settled another privacy case with the FTC over its Ring home security subsidiary.

The new lawsuit is part of a larger effort by regulators to limit the power of tech giants like Amazon, Apple, Google, Microsoft and Meta. The US Department of Justice has in recent years filed multiple antitrust cases against Google. European regulators have also scrutinised behemoth tech companies, passing privacy laws, working on proposals to rein in artificial intelligence and filing charges against Google and others.

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Prime has for years attracted subscribers with its menu of benefits, turning the service into one of the keys to Amazon’s dominance. The service was introduced in the US in 2005 for $US79 a year. In Australia, the company first offered the subscription program in 2018. Over time, the company added more perks to the program, like streaming video, and increased the price.

In 2021, Amazon said that it had more than 200 million Prime members around the world. Customers last year spent $US35 billion on Amazon subscriptions, primarily Prime memberships, according to the company’s financial disclosures.

On Wednesday, the FTC said that Amazon had made it particularly difficult to purchase a product in its store without also subscribing to Prime while checking out. In one example, it said the company had used “repetition and colour” to push customers’ focus to Prime’s promise of free shipping and away from the service’s price, leading some to subscribe to Prime without “informed consent.”

The agency also said Amazon made it hard to find the page that allowed consumers to cancel the service. Once they found it, the company bombarded them with offers intended to change their mind. The lawsuit said that Amazon had named the process for cancelling Prime after the Iliad, the lengthy Greek epic poem that recounts the Trojan War.

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Amazon “substantially revamped its Prime cancellation process for at least some subscribers” shortly before the lawsuit, the heavily redacted complaint said. But “prior to that time, the primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them.”

The FTC asked the court to stop Amazon from engaging in those practices and to force the company to pay an unspecified financial penalty.

Critics consider Prime central to Amazon’s business because it keeps customers inside the company’s retail store by offering them other perks. Amazon has said that Prime provides benefits for consumers. When the company lobbied against reforms to antitrust laws focused on the tech giants, it regularly told lawmakers and the media that the changes would hobble Prime.

This article originally appeared in The New York Times.

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