The Federal Trade Commission on Wednesday sued Amazon, alleging the nation's dominant online retailer intentionally duped millions of consumers into signing up for its mainstay Prime program and "sabotaged" their attempts to cancel.
The agency claims Amazon violated the FTC Act and the Restore Online Shoppers' Confidence Act by using so-called dark patterns, or deceptive design tactics meant to steer users toward a specific choice, to push consumers to enroll in Prime without their consent.
"Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money," FTC Chair Lina Khan said in a statement.
Amazon spokesperson Heather Layman said in a statement that the FTC's claims are "false on the facts and the law."
"The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership," Layman said. "As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the facts becoming clear as this case plays out."
The company's shares closed slightly lower on Wednesday.
The FTC had been investigating sign-up and cancellation processes for Amazon's Prime program since March 2021. Tensions flared between Amazon and the FTC when the agency sought to have CEO Andy Jassy and founder Jeff Bezos testify on the company's Prime practices. Amazon argued the request would be unduly and burdensome, which the FTC rejected.
Launched in 2005, the Prime program has grown to become one of the most popular subscription services in the world, with more than 200 million members globally, and it has generated billions of dollars for Amazon. Membership costs $139 a year and includes perks like free shipping and access to streaming content.
The lawsuit, filed in U.S. District Court for the Western District of Washington, accuses Amazon leadership of slowing or rejecting changes that would have made it easier for users to cancel Prime because those changes "adversely affected Amazon's bottom line."
Amazon made it difficult for consumers to buy items on its site without Prime, and a button that instructed users to complete their transaction did not clearly state that they were also agreeing to join Prime for a recurring subscription, the complaint states.
The cancellation process is also difficult to navigate and designed to deter consumers from ending their Prime subscription, the FTC alleged. Amazon used an internal term called "Iliad" to describe the process, referencing Homer's epic poem about the Trojan War, the agency said, citing a report by Insider.
The complaint marks the third case the FTC has brought against Amazon in the last month. Amazon in late May agreed to pay the agency more than $30 million to settle cases alleging privacy lapses in its Alexa and Ring units. The company said it disagreed with the FTC's claims but that it settled in order to move on from the matter.