A significant federal trial is taking place in Seattle, scrutinizing whether Amazon misled customers into subscribing to its Prime service and created obstacles for those seeking to cancel. The Federal Trade Commission (FTC) initiated the lawsuit against Amazon in U.S. District Court, alleging that the company engaged in deceptive practices over the past decade, violating the Restore Online Shoppers’ Confidence Act, which was enacted to ensure transparency in online transactions.
The jury selection process began recently, followed by opening statements. Amazon Prime, which boasts over 200 million members, offers various benefits such as expedited shipping, video streaming, and discounts at Whole Foods. The service generates substantial revenue for Amazon, contributing over $12 billion to the company’s financials in its latest quarterly report—a 12% increase year over year.
Amazon asserts that it provides clear terms for Prime membership and offers multiple accessible options for cancellation, including by phone and online. The company argues in its trial brief that while customer misunderstandings may occur, these do not constitute legal violations.
Contrastingly, the FTC contends that Amazon intentionally complicated the subscription process to maximize sign-ups. The agency highlights instances where customers were prompted to finalize purchases without being clearly informed that they would automatically be enrolled in Prime. The FTC has noted that many consumers inadvertently subscribed to the service, describing Amazon’s internal acknowledgment of the problem as an “unspoken cancer,” suggesting that any clarity could lead to diminished subscriber numbers.
The lawsuit adds that canceling the subscription is cumbersome, requiring customers to traverse a lengthy process described internally as “Iliad,” reflecting the complexity and length of Homer’s epic poem. The process reportedly requires customers to affirm their wish to unsubscribe across multiple pages.
U.S. District Judge John Chun has ruled that the Restore Online Customers’ Confidence Act applies to Amazon Prime and has constrained some legal defenses that Amazon may present at trial. He has supported the FTC’s claim regarding Amazon’s collection of billing information before fully disclosing Prime’s terms. However, several critical points remain for the jury’s determination, including the clarity of Amazon’s membership disclosures and the simplicity of its cancellation method.
Additionally, Judge Chun indicated that two Amazon executives—Neil Lindsay and Jamil Ghani—could face personal liability due to their involvement with the Prime service, with a third executive, Russell Grandinetti, also under potential scrutiny.
In response, Amazon reaffirmed its stance, claiming that neither the company nor the individual defendants acted improperly and that they prioritize customer satisfaction. The FTC, which did not comment on the proceedings, began its investigation into Amazon’s Prime practices in 2021, leading to the current lawsuit filed in 2023.
This trial is occurring amidst broader scrutiny of Amazon, as the FTC filed an antitrust lawsuit against the company, accusing it of monopolistic behaviors in online markets. Recent developments also spotlighted Amazon’s challenges in document compliance, as Judge Chun criticized the company for withholding significant numbers of documents from the FTC.
As the trial progresses, it not only raises questions about Amazon’s business practices but also reflects the ongoing tensions between large tech companies and regulatory authorities, particularly under the current administration.
