FTC settles Amazon Prime deceptive practices suit for $2.5B – JURIST
The Federal Trade Commission (FTC) announced on Thursday a $2.5 billion settlement with Amazon to resolve a lawsuit over alleged deceptive practices tied to Amazon Prime.
Under the court order issued by Judge John H. Chun of the Western District of Washington, $1.5 billion will go to eligible consumers affected by the practices, while $1 billion will be paid as a civil penalty to the FTC. The order also requires Amazon to simplify the Prime cancellations process.
The settlement marks a full and final resolution of the FTC’s June 2023 lawsuit, which accused Amazon of “duping millions of consumers into unknowingly enrolling in its Amazon Prime services” and making Prime membership cancellation onerous and difficult.
The FTC alleged that Amazon did so using “dark patterns” – manipulative website design techniques – exploiting cognitive biases and human psychology to push users to take certain actions. The FTC alleged these practices violated numerous provisions of both the Federal Trade Commission Act and the Restore Online Shopper’s Confidence Act (ROSCA).
Last week, Judge Chun issued a partial summary judgment finding that Amazon violated at least one aspect of ROSCA. Section 4, “Negative Option Marketing,” only allows subscription auto-renewals if the company (1) clearly discloses all material terms beforehand, (2) obtains the customer’s informed consent, and (3) provides a simple mechanism to stop recurring charges.
The court, however, found that the documents showed Amazon violated the first requirement. The rest of the allegations were “factual matters in genuine dispute,” meaning they were outstanding issues to be decided at a full trial, leading to the announcement today.
This is not the first FTC action in relation to a company’s use of dark patterns. In 2023, the FTC finalized an order requiring Fortnite maker, Epic Games, to pay a $245 million settlement for the use of dark patterns to manipulate children into purchasing in-game content.
Earlier this week, the US Supreme Court announced that it will provide a ruling on whether the US president had the power to fire FTC commissioners, which arose when President Donald Trump removed the FTC commissioner Rebecca Slaughter in March.
