Amazon executives may be personally responsible for tricking users into signing up for Prime

Yesterday, Amazon failed to convince a US district court to dismiss the Federal Trade Commission’s lawsuit targeting the tech giant’s alleged history of tricking people into signing up for Prime.

The FTC has alleged that Amazon “deceived, coerced, and manipulated consumers into subscribing to Amazon Prime,” according to a court order, without obtaining informed consent by designing a shady sign-up process. And to keep subscriptions high, Amazon also failed to “provide simple mechanisms for these subscribers to cancel their Prime memberships,” the FTC alleged. Instead, Amazon forced “consumers who intended to cancel to navigate a four-page, six-click, fifteen-option cancellation process.”

In its motion to dismiss, Amazon flatly disputed these characterizations of its business, insisting that its enrollment process was clear, its cancellation process was simple, and that none of its executives could be held liable for failing to fix these processes when enrollments” accidents” became widespread. Amazon defended its current practices, arguing that some of its Prime disclosures “align with practices that the FTC encourages in its guidance documents.”

But the judge apparently did not find Amazon’s denials completely convincing. Considering the FTC’s complaint “in the light most favorable to the FTC,” Judge John Chun concluded that “the allegations sufficiently indicate that Amazon had actual or constructive knowledge that its Prime registration and cancellation flows were deceiving consumers.” consumers”.

In his order, Chun also denied individual motions to fire Amazon executives Russell Grandinetti, Neil Lindsay and Jamil Ghani, who oversaw Prime operations.

The executives had urged the court to dismiss the FTC’s claims against them. They argued that the FTC “singled them ‘for an ‘unprecedented penalty'” when the agency “had recently begun prosecuting companies for using ‘dark patterns'” under the Restoring Online Shoppers’ Confidence Act (ROSCA). ) and the FTC Law. They claimed that the FTC never alerted them to any wrongdoing before filing the lawsuit, so how could they have known they were violating the law?

However, according to Chun, the FTC sufficiently alleged that each of these executives knew they were violating consumer protection laws by prioritizing profits over eliminating dark patterns that triggered “accidental” or “non-consensual” Prime signups.

Chun explained that executives can be “personally liable for corporate violations of the FTC Act if the individual ‘directly participated in or had the authority to control the illegal acts or practices at issue.'”

For example, when Lindsay, who in 2016 had “the most responsibility for the Prime subscription program,” was “asked about Amazon’s use of dark patterns during the Prime sign-up process,” Lindsay justified the dark patterns .

“Lindsay explained that once consumers become Prime members, even unknowingly, they will see what a great program it is and will remain members, so Amazon is ‘agreeing’ with the situation,” Chun’s order said.

And when Grandinetti, who “oversaw the Prime subscription program” in 2018, was told that the sign-up process and automatic renewal feature were frustrating customers, he “vetoed any changes that would reduce enrollment.”

Because executives apparently prioritized profits over reducing friction with customers, the FTC alleged that reasonable customers were absorbed into Prime without their consent. Understandably, customers are sometimes confused by the “discrepancy in size, location and color” of Amazon’s disclosures, Chun suggested. Other times, confusion arose when Amazon tried to upsell Prime customers at checkout by combining their enrollment with their other shopping experience.

One such trick Chun mentioned was that Amazon offered free two-day shipping with the click of a button at checkout that also signed customers up for Prime even if they didn’t complete the purchase.

“With Amazon Prime offering for the purpose of free shipping, reasonable consumers could assume that they would not proceed to sign up for Prime unless they also placed their order,” Chun said, ultimately rejecting Amazon’s claims that all of its “disclosures be clear and visible to any reasonable consumer.”

In response to Chun’s order, an Amazon spokesperson told Ars that Amazon denies that the FTC’s allegations are false.

“The FTC’s claims are factually and legally false,” an Amazon spokesperson told Ars. “The truth is, customers love Prime, and by design, we make it clear and easy for customers to sign up or cancel their Prime membership. As with all of our products and services, we continually listen to customer feedback and seek ways to improve the customer experience and we look forward to having the opportunity to present the true facts of the case.”

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