Amazon Faces US Trial Over Alleged Prime Subscription Manipulation

Jury selection commenced on Monday in a US government lawsuit accusing e-commerce giant Amazon of employing deceptive tactics to enrol millions of customers into its Prime subscription service and then making it nearly impossible for them to cancel.

Opening statements from the rival legal teams were scheduled for Tuesday, with witness testimony to follow.

The Federal Trade Commission (FTC) filed the complaint in June 2023, alleging that Amazon deliberately employed design strategies known as “dark patterns” to trick consumers into subscribing to the $139-per-year Prime service during checkout.

The case revolves around two central allegations:

US District Court Judge John Chun ruled last week that Amazon violated an online shopper protection law by collecting billing information for Prime subscriptions before disclosing the terms of service, excerpts of which were shared publicly.

This summary judgement places Amazon at a disadvantage for the trial, which is being held in Chun’s Seattle courtroom.

Judge Chun is also presiding over a separate FTC case alleging illegal monopoly practices, with that trial scheduled for 2027.

The FTC contends that Amazon knew about widespread non-consensual enrolments but resisted making changes because these sign-ups generated significant revenue.

Key points highlighted in court documents include:

• Confusing checkout interfaces: Customers needed to locate small, inconspicuous links to decline Prime membership, whereas enrolling used prominent buttons.
• Hidden pricing and renewal details: Crucial information about Prime’s cost and automatic renewal was often buried in fine print.
• Labyrinthine cancellation: Cancelling a subscription involved navigating a four-page, six-click, fifteen-option process, described by the FTC as deliberately arduous.

“For years, Amazon has knowingly duped millions of consumers into unknowingly enrolling in its Amazon Prime service,” the complaint states.

Prime has become central to Amazon’s business model, with subscribers spending significantly more than non-members.

Legal Basis and Potential Penalties

The case partly relies on ROSCA (Restore Online Shoppers’ Confidence Act), enacted in 2010, which prohibits charging consumers for internet services without:

1. Clear disclosure of terms
2. Obtaining express consent
3. Providing simple cancellation mechanisms

The FTC alleges that Amazon violated these requirements by collecting billing information before disclosing terms and failing to obtain genuine informed consent.

Amazon’s defence focuses on:

• Arguing that ROSCA and related regulations do not explicitly prohibit the practices under scrutiny.
• Claiming that the FTC is overextending legal interpretation.
• Highlighting that improvements to Prime’s enrolment and cancellation processes have already been implemented.
• Asserting that the allegations are outdated.

Trial Details

• Duration: Expected to last approximately four weeks
• Evidence: Internal Amazon communications, company documents, and testimony from executives and expert witnesses
• Potential outcomes if FTC prevails:
  • Significant financial penalties
  • Mandatory overhaul of subscription practices under court supervision

This trial is part of a broader, bipartisan effort to regulate the power of US tech giants, following years of government inaction.