Amazon Jury Trial Over FTC’s Prime Cancellation Claims Opens (2)

Amazon.com Inc. squared off in court against the Federal Trade Commission over allegations that the company duped customers into signing up for the Prime subscription service and then made it too hard to cancel.

At a four-week trial that kicked off this week in Seattle federal court, a nine-person jury will decide whether Amazon broke consumer protection laws — potentially exposing the company to billions of dollars in penalties and refunds.

Amazon’s thirst for growth led the company to enroll more than 35 million people in Prime without their consent, FTC attorney Jonathan Cohen told the jury Tuesday during his opening remarks.

“Nothing about Prime matters more than the number of members, whether those members wanted to be members or not,” Cohen said. The case is about “one of the largest companies acting like they are above the law.”

Moez Kaba, a lawyer representing Amazon, said the FTC is taking the company to task over formatting issues, like digital font choices and the size of buttons, that went beyond a reasonable reading of the law. Amazon complied with its obligations, he said.

“This is not a shadowy, gimmicky program,” he said. “Nobody gets automatically enrolled for Prime.”

FTC Chair Andrew Ferguson

Photographer: Allison Robbert/Bloomberg

The civil enforcement case was launched by the FTC two years ago when Joe Biden was president. It now pits the the Trump administration against the world’s largest online retailer despite Amazon’s efforts to deepen ties with the White House and reset relations after years of federal scrutiny. The FTC has a separate antitrust case against the company going to trial in 2027.

The FTC claims Amazon makes it easy to enroll in Prime, but requires consumers to click through multiple steps to cancel — process is so arduous that the company internally nicknamed it the Iliad, after Homer’s epic poem. The agency is accusing three Amazon executives of rejecting changes to the process because it would have harmed the company’s bottom line.

Senior Vice Presidents Neil Lindsay and Russell Grandinetti and Vice President Jamil Ghani are accused of helping to orchestrate the plan and ignoring pleas by colleagues to end techniques “to mislead or trick users” into signing up for Prime without clearly stating the services’ terms and conditions, including for billing and free trials.

All three executives are expected to take the stand, along with customers called by the FTC to testify about the difficulty they experienced canceling their subscriptions and obtaining refunds. Amazon employees who the FTC says unsuccessfully tried to raise concerns about the company’s conduct are also expected to testify.

Prime Subscribers

Prime subscribers pay $139 a year for quick delivery, video streaming and other offerings. The program has helped Amazon convert occasional shoppers into loyal customers.

Amazon has defended its enrollment and cancellation processes, saying it receives consent from customers to enroll in Prime and provides “simple mechanisms” to cancel.

The FTC is accusing Amazon of breaking the 2010 Restore Online Shoppers’ Confidence Act, which allows for penalties of more than $53,000 per violation. The FTC says a violation occurs anytime a consumer isn’t provided with clear terms or cancellation procedures. Penalties could reach into the billions of dollars given the number of people at issue. The case will turn on whether jurors think a “reasonable person” could navigate their way through the company’s website.

The trial will be a key legal test of the agency’s efforts to police so-called dark patterns, or tactics used to trick internet users into making unintended choices. The FTC recently sued LA Fitness and Uber Technologies Inc. for making it difficult to cancel subscriptions. The FTC is pursuing these cases after a rule that required companies to make it as easy to cancel a service as to sign up was overturned by a federal appeals court earlier this year.

Cohen said Amazon was aware of customer complaints since as far back as 2015, and repeatedly considered or implemented changes to make the subscription process clearer. “But when Amazon made the enrollment process clearer signups went down, so they undid the changes,” Cohen said.

Cohen said the conduct “takes a toll on real people,” including both its customers and employees. When one Amazon employee expressed concern to Ghani that “an unknown $12.99 charge” could mean less money for gas, food or rent, Cohen said that the executive responded by consulting an attorney and saying that he would coach the employee about what to write in emails.

Financial Penalties

If the jury finds that Amazon and its executives broke the law, it will be up to US District Judge John Chun to decide what financial penalties, including restitution and fines, should be imposed, as well as any changes to the company’s business.

Kaba, the lawyer representing Amazon, told the jury in his opening remarks that the government was relying on a “cherry-picked” reading of Amazon’s internal documents. The company believes unintended signups “disproportionately impact a small portion of our customers,” he said.

Kaba pointed to internal data showing that before Amazon changed the Prime cancellation process in 2023, it took about 40 seconds to cancel a Prime subscription. After those changes, the workflow was cut to 21 to 24 seconds, on average.

(Updates with Amazon attorney’s opening statement starting in fifth paragraph.)

--With assistance from Spencer Soper and Leah Nylen.

To contact the reporters on this story:
Josh Sisco in San Francisco at jsisco6@bloomberg.net;
Matt Day in Seattle at mday63@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Elizabeth Wasserman, Peter Blumberg

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