This week, a pivotal trial is set to commence in a Seattle federal court, delving into the very essence of how Amazon presents itself as a consumer champion to the vast number of people relying on its online shopping platform.
A lawsuit filed two years ago by the Federal Trade Commission (FTC) alleges that Amazon deliberately misled tens of millions of individuals into signing up for its Prime membership program. The FTC further claims that once enrolled, customers encountered significant difficulties when attempting to cancel their subscriptions.
“For years, Amazon was aware it was collecting consumer funds without their explicit consent, yet chose to take no action,” stated the FTC in a recent court document.
Amazon vehemently refutes these allegations, asserting that customers willingly joined Prime because they recognized its exceptional value.
Francis Mascarenhas/Reuters
Mark Blafkin, an Amazon spokesman, commented, “Amazon attracts Prime subscribers by ensuring the service is both useful and valuable. Our strategy is effective — with hundreds of millions of members, Prime stands as one of the most successful subscription programs globally, evident in its high renewal rates and customer satisfaction.”
While perhaps not as broad as the FTC’s antitrust suit against Amazon, this case specifically scrutinizes the company’s management of a highly popular subscription service that is deeply integrated into the daily routines of countless customers.
“The FTC aims to deliver justice to Americans who have been harmed by Amazon’s practices,” said Joe Simonson, an FTC spokesman, looking forward to the trial.
Introduced two decades ago, Prime has evolved into what the FTC describes as “the world’s largest subscription service.” Jeff Bezos, Amazon’s founder, consistently referred to it as a “cornerstone” of the company. Priced at $139 annually or $14.99 per month, it offers benefits like expedited shipping, video streaming, discounts at Amazon-owned Whole Foods, and various other advantages.
In 2016, Mr. Bezos famously wrote, “We aspire for Prime to offer such compelling value that membership becomes an indispensable choice.”
Last week, Judge John H. Chun of the U.S. District Court for the Western District of Washington ruled that if a jury finds Amazon guilty of legal violations, at least two senior executives, Neil Lindsay and Jamil Ghani, will be held personally accountable.
Amazon maintains that its executives acted ethically and always prioritized customer interests.
Judge Chun also reprimanded Amazon for failing to disclose tens of thousands of documents that he deemed improperly marked as privileged. He stated that this conduct “appears to be motivated by a desire to gain a tactical advantage” and was “tantamount to bad faith.”
“We are confident that the evidence will prove these executives acted appropriately and that customer satisfaction is always our top priority,” reiterated Mr. Blafkin, the Amazon spokesman.
Jury selection is slated to commence on Monday, with opening statements scheduled for Tuesday. The trial is expected to last approximately one month. Should the jury conclude that Amazon broke the law, the judge will then determine the appropriate penalties. The FTC has not yet specified any monetary damages.
An estimated 200 million individuals in the United States subscribe to Prime for their Amazon shopping. Last year, subscriptions, predominantly Prime, generated over $44 billion. However, Prime’s significance to Amazon extends far beyond membership fees; Prime members are considered the company’s most valuable customers, purchasing more items and more frequently than non-subscribers.
Michael Levin, whose firm, Consumer Intelligence Research Partners, has been surveying Amazon shoppers for over a decade, noted that customers rarely cancel Prime, and the subscription actively encourages sustained shopping habits. His firm’s data indicates that Prime members spend twice as much on Amazon compared to those without Prime.
“We cannot overstate Prime’s critical role in Amazon’s retail operations,” he emphasized in a recent interview.
The FTC’s case largely revolves around the concept of “dark patterns” — whether a website’s design intentionally guides customers into unwanted subscriptions or complicates the cancellation process. The FTC highlighted internal documents revealing that the Prime cancellation procedure was, at one point, code-named “Iliad,” a reference to the lengthy ancient epic poem about the Trojan War.
“Instead of simply allowing consumers to cancel, each step of Amazon’s ‘Iliad’ process inundates consumers with various links, offers, and other information, diverting them from completing the cancellation,” the FTC asserted in a recent court filing.
Amazon argues that guiding customers to explore new services and requiring a few clicks to cancel are standard industry practices that consumers have come to anticipate. The company contended that “consumers are accustomed to — and therefore easily navigate — cancellation processes that incorporate offers and additional marketing information.”
In its own court submissions, Amazon stated that the FTC’s case misinterprets internal data and cherry-picks correspondence out of context. The company wrote, “Leadership consistently stressed that customer trust — which would be eroded if customers felt deceived, confused, or tricked — was paramount.”
Amazon first received inquiries from the FTC in March 2021, two months into President Joseph R. Biden Jr.’s term, when the agency issued a civil investigative demand for documents related to Prime. This occurred just days before Mr. Biden announced his intention to nominate Lina Khan, a legal scholar known for her critiques of Amazon, to the commission, where she subsequently became chair.
When the FTC initiated its lawsuit against Amazon in 2023, it marked the first instance the agency had pursued legal action against Amazon under Ms. Khan’s leadership.
However, the FTC’s investigation into Prime actually commenced in the final days of the first Trump administration, according to an anonymous source familiar with the inquiry. The second Trump administration continued to pursue the case. This past summer, the FTC reached settlements with education technology company Chegg and dating app Match over similar subscription-related complaints.
“Amazon was fully aware of the immense harm its practices inflicted upon Prime consumers, yet it chose to do nothing to rectify the issue, or even allowed it to persist, driven by fears of impacting Amazon’s financial performance,” the FTC argued in a recent filing.
Amazon countered that given the vast scale of Prime, some level of customer frustration or enrollment errors was unavoidable. The company stated, “Evidence showing a small percentage of customers misunderstood Prime enrollment or cancellation does not establish that Amazon violated the law.”