According to the FTC, Amazon manipulated consumers into signing up for Prime membership without their consent and also made it difficult to cancel subscriptions.
Three days into a trial in a Seattle federal court, e-commerce giant Amazon has agreed to pay a $2.5bn penalty to settle a case brought by the US Federal Trade Commission (FTC) for violating the regulator’s rules.
The case was first filed in June of 2023, when the FTC claimed that Amazon used “dark patterns” in its interface to trick customers into enrolling in automatically renewing Prime subscriptions and “knowingly made it difficult for consumers to cancel”.
Dark patterns are deceptive design practices crafted to intentionally trick people and are often against our best interests. This can include a delay or failure to disclose information that might affect the consumer purchasing decision, the deliberate obscuring of important information and framing information in a way that steers the consumer towards a decision that is favourable to the retailer.
Yesterday (25 September), the FTC revealed that Amazon had agreed to a deal to settle the allegations, where the e-commerce giant will have to pay a $1bn civil penalty and $1.5bn in refunds to the affected customers.
The company will also have to take efforts to cease unlawful enrollment and cancellation practices and make changes such as including an easily seen button where customers can decline Prime membership and discarding the button that says “No, I don’t want free shipping”.
The terms of Prime must be made clear during the enrollment process in regards to cost, date and frequency of charges, as well as auto-renewal and cancellation policies. Also, the process of cancellation must be similar to how the consumer signed up and can not be difficult, costly or time-consuming.
Amazon, which as part of the settlement did not admit any wrongdoing, will also have to pay for an independent third-party supervisor to monitor compliance with the consumer redress distribution process.
According to the statement released by the FTC, Amazon documents discovered in the lead up to the trial showed that Amazon executives and employees discussed unlawful enrollment and cancellation problems, with individuals commenting “subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer”.
The FTC has previously investigated instances of dark patterns across popular sites and apps, noting that manipulative techniques can dupe consumers into paying for unwanted products and services.
In an episode of the For Tech’s Sake podcast in 2023, Prof Owen Conlan, a research lead at Adapt, the Science Foundation Ireland research centre focused on digital content, discussed the issue of pervasive dark patterns.
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