The FTC in a new lawsuit against Amazon on Wednesday, accusing the e-commerce giant of luring unwitting customers and tricking them into subscriptions for Amazon Prime membership when they were only looking to stream videos available on Amazon’s subscription video service, and creating an intricate process to cancel it.
Prime Video is Amazon’s subscription streaming service, customers can watch and rent shows and movies for an $8.99 monthly fee. It’s a separate product from a full Amazon Prime membership, which costs $14.99 monthly. Amazon Prime generate $25 billion in revenue each year.
Amazon Prime deceptive tactics
Although “it is possible to sign up for Prime Video alone, it is difficult to do so,” the FTC said in a complaint filed on Wednesday.
As per the complaint, Amazon’s website was set up in a way that tricked customers out of the lower cost Prime Video subscription. Colored buttons encouraged and redirected customers to sign up for a full Amazon Prime subscription.
“Capitalizing on some consumers’ inability to appreciate the difference between ‘Prime’ and ‘Prime Video,’ the Prime Video enrollment process fails to clarify Amazon will enroll them in Prime rather than the less expensive Prime Video, on both desktop and mobile platforms,” the complaint said.
“Specifically, Amazon used manipulative, coercive, or deceptive user interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions,” the FTC alleged.
Amazon in a statement said, it had already been “in the midst of” conversations with the FTC when the agency publicized the suit “without notice to us.”
“The FTC’s claims are false on the facts and the law,” an Amazon representative said in a statement.
The FTC’s lawsuit against Amazon was in part sparked by Insider’s report last year that showed how the company worried for years that it duped customers into signing up for Prime subscriptions. In last year’s report, Insider found that Amazon had embarked on an initiative to make it easier for customers to distinguish what content on Prime Video was free or not, which they called Project Clean Slate.
Amazon’s Prime membership program, best known for free delivery and streaming video content, has enjoyed unprecedented growth to become one of the most popular subscription programs in the world, with more than 200 million members globally.
Former CEO, Jeff Bezos and other top Amazon executives believe Prime represents the best of the company’s mission in putting the customer first. The membership program offers fast delivery and a bevy of other perks at what Amazon perceives to be a bargain price of $139 a year or $14.99 per month in the U.S.
Prime has also been a key part of the online retailer’s growth. Prime members tend to buy more and shop more frequently at Amazon, driving higher sales and a more loyal customer base for the retail giant.
