• by Wendy Davis  @wendyndavis, May 29, 2024

Siding against Amazon, a federal judge has ruled that the Federal Trade Commission can proceed with charges that the company used “dark patterns” to dupe people into signing up for Prime subscriptions, and also thwarted subscribers' attempts to cancel.

The ruling, issued Tuesday by U.S. District Court Judge John Chun in Seattle, stems from a lawsuit brought against the company in June 2023 by the FTC. The agency alleged that Amazon used “manipulative, coercive, or deceptive user-interface designs” to trick customers into enrolling in Prime -- a $13 a month subscription service that offers discounts, free delivery of many items, and access to streaming video.

An Amazon spokesperson said the FTC's claims “are false on the facts and the law,” adding that the company makes it “clear and simple for customers to both sign up for or cancel their Prime membership.”

“We look forward to the opportunity to present the real facts in the case,” the spokesperson said.

Many of the FTC's allegations focus on Amazon's design choices. For instance, the FTC alleged that Amazon's interface required shoppers to say whether they will enroll in Prime before completing a purchase. The enrollment page said Prime subscribers would receive benefits like free shipping; the page also disclosed that subscriptions would continue until cancelled, but in small print, according to the agency.

Though Amazon offered shoppers the ability to make a purchase without signing up for Prime, that choice was “less prominent” than the enrollment option, the FTC said in its complaint. The agency added that Amazon knew since at least 2018 that some people couldn't find the link to decline enrollment.

The FTC also asserted that Amazon "knowingly complicated the cancellation process.”

“Fittingly, Amazon named that process 'Iliad,' which refers to Homer’s epic about the long, arduous Trojan War,” the agency wrote, adding that the company failed to implement changes that would have simplified Iliad.

Amazon revised its cancellation procedures shortly before the complaint was filed, but the FTC said last year that the cancellation process “still contains problematic elements.”

The FTC's complaint included claims that Amazon violated the Restore Online Shoppers Confidence Act -- a federal law that requires companies to disclose all terms of subscriptions in advance, and offer simple cancellation mechanisms.

Amazon urged U.S. District Court Judge John Chun in Seattle to dismiss the lawsuit at an early stage, arguing that even if the allegations were proven true, they wouldn't show that the company deceived Prime members about subscriptions.

Among other arguments, the company contended that allegations regarding design choices implicate all marketing efforts.

“A primary function of any commercial advertising is to persuade consumers to purchase the products advertised -- often through strategically placed textual and visual displays or attention-grabbing fonts and colors,” Amazon wrote.

The Interactive Advertising Bureau backed Amazon, arguing in a friend-of-the-court brief that the “dark patterns” allegations were largely based on “a handful of benign, ordinary statements made in the course of Amazon marketing the benefits of its Prime membership and 'design elements' chosen by Amazon, such as the use of color to draw a consumer’s attention, to communicate Amazon’s message that Prime is valuable.

The IAB also said the FTC “appears to seek to punish, ban, and regulate speech that it has not -- and cannot -- allege is untruthful by applying the label 'dark patterns.'”

Chun rejected those arguments Tuesday, ruling that the allegations, if true, could support the claims that Amazon failed to clearly disclose key terms about Prime subscriptions.

“Even though the price of Prime and the fact that the subscription automatically renewed were bolded, the disclosures were in smaller text at the bottom of the page in black and white while larger and/or colorful text at the top of the page told consumers that they were receiving the gift of a free trial, saving money on the cost of shipping, and receiving faster delivery for 'FREE,'” he wrote in a 49-page decision.

“The court cannot conclude as a matter of law that the disclosures would be clear and conspicuous to any reasonable consumer,” he added.

Chun also rejected Amazon's bid to dismiss claims relating to the Prime cancellation procedures. Instead, he held that the FTC's allegations regarding the Iliad flow warranted further proceedings.

“The FTC alleges that Amazon’s Iliad Flow online cancellation process required consumers to click six times and go through four screens, seeking to entice consumers not to cancel the subscription, or merely pause the subscription, before the consumer could finally cancel Prime,” he wrote.

The FTC's complaint came two years after Public Citizen, Fairplay, Center for Digital Democracy and other advocacy groups sought an investigation of Amazon's cancellation practices. Those groups drew on a report issued by the Norwegian Consumer Council (a watchdog funded by the Norwegian government) that said subscribers who wish to cancel Prime memberships “are faced with a large number of hurdles, including complicated navigation menus, skewed wording, confusing choices, and repeated nudging.”

The FTC isn't the only one suing Amazon over Prime subscriptions. Earlier this month, Arizona's attorney general alleged in a complaint brought in state court that the company's “layered and confusing” cancellation procedures dupe consumers.