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US agency sues Amazon for 'deceptive' practices

June 21, 2023

The online giant has been accused of tricking customers into joining its Prime service, "trapping" them in automatically renewing subscriptions. Such memberships are a main profit driver for the retail behemoth.

The trailer of an Amazon delivery vehicle
Amazon is accused of duping millions of customers into automatically renewing subscriptions generating truckloads of cash for the world's largest online retailerImage: Fotostand/picture alliance

The US Federal Trade Commission (FTC) on Wednesday filed a lawsuit against Seattle-based online retailer Amazon, for deceptive business practices.

The FTC, an anti-trust and consumer protection watchdog, says it filed the suit against Amazon in the US District Court in Seattle for using "manipulative, coercive or deceptive user-interface designs known as 'dark patterns' to trick customers into enrolling in automatically renewing Prime subscriptions."

Prime, which affords members discounts on products as well as free shipping, access to films and music, and other benefits, is a major profit driver for Amazon. The subscription service boasts more than 200 million members worldwide. 

On average, a Prime subscription in the US costs $139 (€127) yearly.

What is Amazon accused of?

The FTC suit contends that, "Amazon has knowingly duped millions of customers into unknowingly enrolling in Amazon Prime." The filing goes on to say that Prime subscriptions were initiated without consumer consent and that Amazon made it extremely difficult for consumers to get out of them.

The watchdog has been investigating Amazon's dubious subscription practices since March 2021.

Amazon founder Jeff Bezos and his second wife Lauren Sanchez applaud while attending Wimbeldon
Amazon founder Bezos, one of the wealthiest men in the world, has repeatedly been accused of unfair business practices and mistreating employeesImage: SOLO Syndication/picture alliance

FTC Chair Lina Khan said, "Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money."

The FTC suit seeks to permanently stop the company from continuing such practices, as well as leveling financial penalties against it.

Not the first time Amazon has faced unfair business charges

Amazon, known as one of the world's top five tech companies alongside Google parent Alphabet, Apple, Meta (formerly Facebook) and Microsoft, was founded by Jeff Bezos in 1994.

It is the world's largest e-commerce company with annual revenue of over $513 billion. Bezos has an estimated net worth of $125 billion and is the world's third richest man.

Amazon has repeatedly faced accusations of tax avoidance and anti-competitive behavior, as well as criticism over customer data collection and labor-related issues tied to its poor treatment of employees.

js/rs (AFP, Reuters)