July 10, 2023: The Federal Trade Commission (FTC) has filed a lawsuit against Amazon, accusing the e-commerce giant of deceptive practices related to its Prime subscriptions. The FTC alleges that Amazon intentionally misled millions of consumers through deceptive user interface designs, forcing them to sign up for Prime subscriptions without explicit consent.
Over the past few years, numerous complaints have been lodged against Amazon regarding Prime’s sign-up and cancellation processes. Critics argue that Amazon deliberately designed these processes to misdirect and confuse users rather than genuinely assist them.
In response to the mounting complaints, the Norwegian Consumer Council (NCC) initiated an investigation and released a report in January 2021 titled “You Can Log Out, But You Can Never Leave: How Amazon manipulates consumers to keep them subscribed to Amazon.” The report concluded that Amazon’s practices were intentionally unfair and deceptive, aimed at undermining consumer choice. The examined practices included complex cancellation procedures, tricky questions, and automatic conversion of free trials into paid memberships.
Amazon was specifically accused of employing graphic designs and ambiguous wording to make the cancellation process unnecessarily challenging and confusing. As evidenced by screenshots, the process involved multiple clicks and misleading prompts, leading users to believe they had canceled their membership when, in fact, they hadn’t.
One of the intriguing aspects highlighted in the NCC report and the FTC lawsuit is the allegation that Amazon used “dark patterns” in its designs. These manipulative design tactics, known as “dark patterns,” were intended to trick users into signing up for services they may not have intended to subscribe to through misleading and unclear offers.
Leaked data revealed that Amazon internally referred to these deceptive designs as “Project Iliad,” a term associated with the ancient Greek epic poem that depicted deceptive and manipulative methods used in the Trojan War. The choice of this code name raises questions about whether Amazon was fully aware of the deceptive nature of its practices.
If the lawsuit proves successful and the claims are substantiated, it will become evident that Amazon employed questionable tactics to retain customers while congratulating itself on its cleverness. The FTC lawsuit alleges that Amazon intentionally created a complicated cancellation process, known as the “Iliad Flow,” and resisted user experience changes that would have simplified the process, all to protect its financial interests.
These deceptive practices have yielded results for Amazon. After implementing Project Iliad in 2017, Prime cancellations reportedly dropped by 14%. Prime members spend an average of $1,400 annually on Amazon, significantly outspending regular non-Prime customers, who spend around $600 yearly.
The total revenue generated by Amazon through these misleading practices remains to be seen. However, with mounting evidence, ongoing investigations, leaked data, and impending litigation, Amazon will face significant challenges.
The FTC’s lawsuit against Amazon underscores the importance of clear disclosure and transparency in subscription services, protecting consumers from misleading tactics and ensuring their right to make informed choices.