FTC Slams Amazon with Lawsuit Over Prime Subscriptions: Here’s What You Need to Know

In a lawsuit filed last week against Amazon, the Federal Trade Commission (FTC) claims the online retail giant has knowingly tricked millions of consumers into signing up for Amazon Prime and intentionally complicated the cancellation process to keep subscribers locked into the automatically renewing service.

Specifically, the 87-page lawsuit says that Amazon has for years relied on “dark patterns”—deceptive design tactics used to manipulate users’ choices—across its services and platforms to fool consumers into enrolling in recurring Prime subscriptions. Per the suit, the company has violated the FTC Act and the Restore Online Shoppers’ Confidence Act by failing to clearly disclose the price and terms of its Prime service, provide a simple cancellation method and obtain consent before charging consumers.

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina M. Khan said in a statement. “These manipulative tactics harm consumers and law-abiding businesses alike.”

Lawsuit claims deceptive web designs “duped” millions into subscribing to Amazon Prime

Amazon ensures that enrolling in Prime—even unintentionally—is as simple as the click of a button, the case says. Whether a consumer is surfing Prime Video, using an Amazon Fire TV streaming device or shopping on Amazon.com, the company often presents them with numerous opportunities to subscribe, the complaint relays. However, the FTC claims that Amazon unlawfully disguises and distracts consumers from relevant information about its Prime service, including the fact that the program renews automatically unless a subscriber cancels.

For instance, the filing explains that Amazon shoppers are often interrupted with a prominent orange button encouraging them to enroll in Prime, which costs $139 per year or $14.99 monthly, while a comparatively unnoticeable link allows them to decline the offer. The orange button, which instantly subscribes a user if clicked, often references the offer’s exclusive perks and uses language like “free shipping” or “free trial,” the lawsuit shares. In contrast, the less conspicuous blue link to decline sometimes points out that selecting this option means the consumer will lose access to such perks, the suit states. As the case tells it, a consumer using a mobile device to place an order on Amazon.com cannot proceed too far toward checkout before a footer appears and occupies the bottom half of the screen. In the footer, Amazon informs the shopper that “we’re giving you 30 days of Prime for FREE” and includes a yellow button that reads “Get FREE Two-Day Delivery with Prime,” the complaint explains. Below these offers is a much smaller link to decline, and only if the user scrolls to the bottom of the footer will they find information about the service’s terms and conditions, including that their Prime membership “continues until cancelled,” the lawsuit shares.

According to the suit, a consumer cannot view the full text at the bottom of the footer without scrolling down or clicking the small arrow in the corner, which is precariously close to the yellow button that will enroll them in Amazon Prime. In addition, the shopper cannot proceed with their order until they either select the button to subscribe or click the smaller “No thanks” link, the case explains.

Providing another example of the company’s allegedly misleading tactics, the FTC’s complaint argues that Amazon dupes consumers into signing up for Prime instead of Prime Video, a separate and cheaper subscription compared to Amazon Prime. Per the case, Amazon routes users who are trying to enroll in the Prime Video service to a page where they must confirm their details and select a plan. Importantly, the plan type defaults to “Prime,” and the consumer must click a gray “change” button to the right, switch the plan to “Prime Video” on another page and then navigate back in order to continue enrollment, the filing describes.

Users who do not realize the difference between the two services can find themselves unintentionally subscribed to the pricier Amazon Prime service instead of Prime Video, the lawsuit claims, as a simple click of the orange “Start your free trial” button enrolls them by default in Amazon Prime.

Prime cancellation process is designed to “thwart” users, FTC suit says

As the case tells it, before Amazon relented under pressure from the FTC and made changes to its arduous cancellation process in April of this year, the only ways to cancel a Prime subscription were by contacting customer service or navigating through a “four-page, six-click, fifteen-option cancellation process” referred to internally as the “Iliad,” a reference to Homer’s lengthy epic about the Trojan War.

To cancel an Amazon Prime subscription, a subscriber first needed to make their way through multiple drop-down menus and columns of options to find the “End Membership” button, the filing states. Per the lawsuit, selecting this option routed the user to the “Iliad flow,” where they had to navigate through pages of Amazon Prime marketing, options to switch between monthly and annual payments, discount promotions and a summary of the Prime services they had used as a subscriber.

“Amazon designed the Iliad cancellation process … to be labyrinthine,” the complaint relays, adding that the company “slowed or rejected user experience changes that would have made Iliad simpler for consumers because those changes adversely affected Amazon’s bottom line.”

Although Amazon recently revamped its cancellation process, it remains far from simple and is still difficult to locate for users seeking to end their subscriptions, the filing notes. The lawsuit adds that, without pressure from the FTC, the company would likely reinstate the Iliad process.

Is this a class action lawsuit? How can I join?

Crucially, this case is not a class action lawsuit, and there’s nothing that Amazon users need to do to sign up or join. In this action, the FTC, a government agency, is directly suing Amazon in federal court to hopefully provide restitution to injured consumers.

The FTC, like the Consumer Financial Protection Bureau (CFPB), is one of the federal agencies authorized to take action against companies or individuals when it has “reason to believe” that they are violating the law and a lawsuit appears to be in the public interest.

Some lawsuits filed by the FTC or CFPB, if successful, may result in refunds to consumers. Head here for a list of recent FTC actions that have resulted in consumer refunds. More information about how the agency issues refunds can be found here.

If the suit detailed on this page reaches a settlement, we’ll be sure to report on it here. But as with all lawsuits, progress can be slow.

For more information on this lawsuit, check out the FTC’s official press release on the case. The complaint, though heavily redacted, can be read below.

The FTC squares off against Amazon

The agency first subpoenaed Amazon in March 2021 seeking information to determine whether the Prime subscription process and the Iliad cancellation flow breached federal law, the suit says. Since then, Amazon is alleged by the FTC to have withheld and concealed pertinent information, misled the agency and attempted to delay the investigation, the case shares.

“But for Amazon’s effort to frustrate the Commission’s investigation,” the complaint reads, “the Commission would have filed this action many months earlier.”

An Amazon spokesperson told the Associated Press that the company found it “concerning” that the FTC did not provide notice before filing the suit.

“While the absence of that normal course of engagement is extremely disappointing, we look forward to proving our case in court,” the spokesperson said.

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