subscription cancellation

FTC Takes Aim at Amazon’s Subscription Cancellation Process

On June 21, 2023, the Federal Trade Commission (“FTC” or the “Commission”) sued online retail giant Amazon.com for violating of section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act (“ROSCA”). The FTC is a United States governmental agency whose primary mission is to protect consumers and enforce civil antitrust laws. With the rise of ecommerce, according to the FTC, many online retailers have utilized unscrupulous tactics, including confusing cancellation policies, to maximize profits from unknowing or unwilling repeat customers. Amazon’s arduous cancellation process, as alleged by the FTC, is just one example of the mega-retailer’s utilization of dark patterns. “Dark patterns” are subtle design tricks that influence consumers into making unintended decisions, or to the same end, discourage behavior that hurts a business’s bottom line.

Concerned with what appeared to be heavy pattern usage of dark patterns, the Commission first subpoenaed Amazon on March 16, 2021. The current lawsuit is the result of what the FTC alleges is not only Amazon’s unwillingness to remedy its purported dishonest business model, but also to respond to the subpoena in good faith. While Amazon has yet to respond to the allegations, the Commission’s Complaint paints a clear picture of what online businesses should avoid when designing their subscription cancellation processes.

A Brief Overview of the Amazon Prime Subscription Model

For those unfamiliar with the retailer, Amazon Prime is its paid subscription service, which gives subscribers access to additional services that are otherwise unavailable or available at a premium to other Amazon customers. These services include, but are not limited to, free shipping, expedited shipping, Amazon Prime Video, and Amazon Music. Consumers can choose to subscribe to Amazon Prime at $14.99 per month or $139 per year. Once subscribed, the consumer continues to pay for the Amazon Prime renewal every month until he/she decides to cancel. The subscription cancellation process itself is what drew the ire of the FTC.

What are the FTC’s Concerns with Amazon’s Subscription Cancellation Process?

The FTC alleges that, for years, Amazon knowingly complicated and drew out the Amazon Prime subscription cancellation process. It certainly does not help that Amazon internally referred to its cancellation process as the “Iliad,” a reference to the Ancient Greek epic poem which spans 24 books.

Once an Amazon Prime user decided on subscription cancellation, the Complaint alleges, there were only two ways to go about doing so: the user could proceed through “a) through the online labyrinthine cancellation flow known as the ‘Iliad Flow’ on desktop and mobile devices; or b) by contacting customer service.” This was immediately problematic because ROSCA requires that the subscription cancellation process be simple and intuitive. Specifically, subscribers should be able to cancel in as few steps and as easily as it is to sign up. Of note, Amazon did not allow consumers who subscribed via Prime Video and FireStick to cancel their subscriptions through the same interface.

Furthermore, according to the Complaint, the Amazon Prime subscription cancellation process required consumers to navigate a four-page, six-click, fifteen-option cancellation process if attempted via desktop. Amazon Prime subscribers that attempted to cancel their subscriptions on a mobile device had to navigate an eight-page, eight-click minimum process. Similar to the protagonist in the Iliad, a subscriber navigating the cancellation flow had to avoid traps and temptation to remain on the plan at every turn on their journey towards cancellation. Such traps included repeated warnings that cancellation would result in ineligibility for exclusive Prime offers and that items tied to the Prime membership would be affected if they proceeded further. According to the Commission, “Amazon designed the Iliad Flow (both desktop and mobile) to inform consumers about a) Prime benefits they would lose by cancelling Prime, and b) alternative payment methods available to them to keep Prime.” In a nutshell, the FTC alleges that while new users could sign up for Amazon Prime in a matter of seconds with the click of one or two buttons, subscribers attempting to cancel their subscriptions had to spend a decent amount of time proceeding through a gauntlet designed to instill fear and/or uncertainty with cancelling.

Why is the FTC Complaint Relevant to your Business?

In response to the Commission’s investigation, Amazon has begun rolling out major revisions to its Amazon Prime subscription cancellation process. However, the detailed, and substantiated, FTC allegations provide a blueprint for mistakes that online businesses should avoid when designing subscription cancellation processes. The Commission has been building its case against Amazon for over three years. The filing of the Complaint demonstrates that the FTC will not hesitate to continue in its quest to stamp out dark patterns, no matter how large the business is, or how imposing its legal representation.

Businesses would be well-apprised to acquire and retain customers through loyalty and value, and not through a perplexing cancellation flow. To stay out of the FTC’s crosshairs, companies should retain counsel that is experienced in the online marketing space.

If you require assistance with complying with FTC rules and regulations as they ramp up enforcement against dark patterns, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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Photo by Christian Wiediger on Unsplash

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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