Judge Denies Amazon’s Bid to Dismiss FTC Lawsuit Alleging Retailer Tricked Users Into Signing up to Prime

An Amazon worker walks past his Amazon Prime delivery truck in Washington, on Feb. 19, 2022. (Stefani Reynolds/AFP via Getty Images)

A federal judge on Tuesday declined to dismiss a lawsuit filed by the Federal Trade Commission (FTC) accusing retail giant Amazon.com Inc. of tricking users into signing up for Prime memberships and then making it overly complicated for them to unsubscribe.

U.S. District Judge John Chun in Seattle denied Amazon’s request to dismiss the FTC’s complaint, noting that courts grant motions to dismiss under the reasonable consumer test only in “rare situations” in which the facts alleged in a complaint “compel the conclusion as a matter of law that consumers are not likely to be deceived.”

“Here, a reasonable consumer seeking to complete a purchase on Amazon’s marketplace could miss the small print at the bottom of the page,” Judge Chun said.

“Even though the price of Prime and the fact that the subscription automatically renewed were bolded, the disclosures were in smaller text at the bottom of the page in black and white while larger and/or colorful text at the top of the page told consumers that they were receiving the gift of a free trial, saving money on the cost of shipping, and receiving faster delivery for ‘FREE,’” he concluded.

The Epoch Times has contacted an Amazon spokesperson for comment.

The FTC filed a lawsuit against the online retailer in June 2023, accusing it of using deceptive practices.

Specifically, the agency claimed that Amazon had for years “knowingly duped millions of consumers into unknowingly enrolling” in its $14.99-a-month Prime membership service and then used “manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing” their subscriptions.

Problem ‘Well Known’ Within Amazon

Described in the lawsuit as “nonconsensual enrollment,” the problem was “well known” within Amazon, the lawsuit alleged.

The consumer protection agency further claimed that some employees at the retailer had urged company executives responsible for Prime to address the automatic enrollment issue so that Amazon would not be “tricking its customers.”

However, the company’s leadership “slowed, avoided, and even undid user experience changes that they knew would reduce nonconsensual enrollment because those changes would also negatively affect Amazon’s bottom line,” the legal filing alleged.

The agency further accused Amazon of knowing that some consumers were charged for multiple months before they canceled their memberships.

Canceling memberships was made difficult by Prime’s cancellation process, called the “Iliad Flow,” a reference to one of the two major ancient Greek stories attributed to Homer. According to the lawsuit, users had to ‘navigate a four-page, six-click, fifteen-option cancellation process.

While Amazon initially implemented changes to increase clarity among consumers, it later rolled back those changes because they resulted in a reduction in new Prime subscribers, the lawsuit alleged.

Eventually, amid “substantial pressure” from the FTC, Amazon revamped its cancellation process in April 2023, shortly before the FTC filed its complaint, according to the lawsuit.

However, the company “still requires five clicks on desktop and six on mobile for consumers to cancel from Amazon.com,” the complaint stated.

The FTC is seeking civil penalties and a permanent injunction against Amazon to prevent future violations.

Amazon's website on Prime Day in a stock photo. (Dennizn/Shutterstock)

Amazon Says FTC Claims Are False

Amazon has denied the allegations.

In a statement to The Epoch Times shortly after the lawsuit was filed in 2023, the company said the FTC’s claims were “false on the facts and the law.”

“The truth is that customers love Prime, and by design, we make it clear and simple for customers to both sign up for or cancel their Prime membership,” the spokesperson said.

“As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the facts becoming clear as this case plays out,” the spokesperson continued.

The company also sought to dismiss the lawsuit, arguing in court filings that it had “prominently and repeatedly” disclosed key terms including Prime’s price and automatic renewal feature to customers.

Amazon, in attempting to dismiss the lawsuit, further claimed that the FTC sought to “establish an entirely new theory of legal liability based on misleading and subjective characterizations of unremarkable marketing techniques.”

A 10-day non-jury trial in the case is scheduled for February 2025.

Amazon is also facing a separate lawsuit filed by an investor, D.M. Cohen Inc. over its alleged scheme to prevent customers from unsubscribing to Prime.

The retail giant is also being sued by the FTC over alleged violations of U.S. antitrust laws concerning its alleged use of unfair strategies to maintain monopoly power.

The retailer has also denied those charges.

Tom Ozimek and Reuters contributed to this report.