FTC has accused Amazon of forcing 'millions of customers' to continue their paid subscription
The US consumer protection agency, the Federal Trade Commission (FTC), filed a complaint against Amazon on Wednesday, accusing the online retail giant of nudging 'millions of customers' into renewing their subscription to its Prime service without their knowledge.
This was reported by The Guardian.
Launched in 2005, Prime boasts over 200 million members worldwide. The FTC has taken Amazon to court over what it calls a years-long attempt by the tech giant to enroll consumers in its paid subscription program, Amazon Prime, making it difficult for them to cancel.
The FTC, the US agency responsible for consumer protection, filed a federal lawsuit in Seattle, where Amazon's headquarters are located, claiming that the tech giant 'knowingly deceived millions of consumers into unknowingly signing up for Amazon Prime' through a secret project codenamed 'Iliad.'
"Amazon deceptively pushed consumers into signing up for a subscription with automatic renewal, which not only disappoints them but also costs them money," said FTC Chair Lina Khan.
"This manipulative tactic harms both consumers and law-abiding businesses," she added.
The company's executives slowed down or rejected changes that would have made canceling the subscription easier, according to the complaint. These practices violate the Federal Trade Commission (FTC) Act and another law called the Restore Online Shoppers' Confidence Act.
The FTC also accuses Amazon of creating 'manipulative, coercive, or deceptive computer or smartphone interfaces to encourage consumers to sign up for automatic renewal.' For example, it was more difficult to find the box for purchasing an item without subscribing, the FTC notes.
"Amazon's online shopping monopoly violates our privacy, deceives us into keeping our Prime membership, and doesn't even allow us to see the best available products," said Kyle Morse, Deputy Executive Director of the Tech Oversight Project, a non-profit watchdog organization.
This practice was 'well-known' within the company, and some employees pushed for its change, but department officials hindered any such steps, according to the FTC.
The agency is seeking a permanent injunction against this practice regarding the Prime subscription, which offers free shipping, access to Amazon's video and music platforms, and an unspecified financial compensation for $139 per year.
Amazon's shares fell 1.4% around 15:20 GMT on Wall Street after the announcement of the complaint.