Amazon is being sued by the FTC over allegations it is tricking customers into signing up for its Prime service.
Amazon is one of the largest companies in the world by revenue, falling only behind Walmart. A decent chunk of its revenue comes from Prime subscriptions, which the company is now getting sued over by the Federal Trade Commission (FTC). The FTC alleges that the online retail giant dupes customers into signing up for Prime using its AI while also making it difficult to cancel your subscription or opt out of the auto-renewal.
The lawsuit also points out that many users intended to sign up solely for Amazon‘s Prime Video service but were “manipulated” into signing up for the more expensive Prime membership. While the Prime Video add-on can be subscribed to individually for $8.99 per month, the more expensive Prime membership is billed at $14.99 per month or $139 annually.
This isn’t the first time that the FTC has taken Bezos and company to task for subscription processes, as the government agency ordered a probe last year that looked into whether the company deceives users into signing up and then makes canceling overly complicated.
Of course, Amazon is disputing the allegations, and a spokesperson that spoke to The Hollywood Reporter said the company makes the sign-up and cancellation process “clear and simple.” However, the complaint lays out how Amazon’s design could be considered “deceptive.” The complaint details how users are presented with multiple opportunities encouraging them to sign up for Prime before checking out and that the button to decline a membership is “comparatively inconspicuous.”
The complaint also points out that Amazon places price and auto-renewal policies further down on the page on mobile devices, forcing them to scroll down to the bottom to find this information. The FTC calls out the process that people have to go through if they want to switch to the lower-priced Prime Video-only option, which includes clicking a button to ‘Change’ the plan, navigating to a new page to make the change, and then navigating back to confirm.
The FTC also honed into the alleged complexities of the cancellation process, pointing out that users have to”navigate a four-page, six-click, fifteen-option cancellation process,” compared to the one or two-click option to enroll in Prime. The suit also stated that users were then presented with numerous options to discourage them from unsubscribing, such as subscribing at a discounted rate, turning off auto-renewal, or declining to cancel altogether.
Finally, the suit criticized Amazon for not allowing users to cancel through the Prime Video application or on the Amazon FireStick.
It seems likely that the online retail giant will fight this lawsuit pretty hard, as subscription fees reportedly account for $25 billion of the company’s annual revenue. Despite Amazon’s subscription revenue being higher than the GDP of Iceland, it’s unlikely Bezos will want to see those numbers go down. While the subscription fees alone are significant, there are undoubtedly a lot of intangible financial benefits the company can glean by having members.
Amazon is also spending more than ever on content for Prime Video, so it likely won’t want to lose those subscribers as it funds incredibly expansive shows like The Lord of the Rings: The Rings of Power. The company also acquired MGM last year for $8.5 billion, so it will likely continue to build its media empire. In any case, we’ll keep you updated as this lawsuit progresses.