The Federal Trade Commission is investigating Amazon Prime’s enrollment tactics to see if Amazon is tricking people into signing up for their membership service, reports Gizmodo. The investigation started several years ago with a focus on how the ecommerce giant gets people to enroll in Amazon Prime. Specifically, the FTC wants to know if the company is using, or has used, manipulative language, user experience, design and other tactics – called dark patterns – to entice unsuspecting shoppers into signing up for a costly Prime membership. As of today, an annual Prime membership is $119 a year. That price increases to $139 a year starting this Friday, March 25.
Sign-up at checkout
According to Gizmodo, one way that Amazon allegedly gets people to sign up for Prime is during the checkout process. If a shopper clicks on “Get FREE Two-Day Delivery with Prime,” they are actually signing up for a 30-day free trial of Prime. Unless the shopper cancels their membership within the first 30 days, they are charged the annual fee.
Difficult to cancel
In addition, the membership cancellation process is “excessively hard,” says (Business) Insider. Amazon allegedly created barriers to canceling memberships, so when new members found out they’d been enrolled, they weren’t able to easily cancel the subscription and get a refund. Instead, they had to go through a series of pages to end their subscriptions. Each subsequent step was an attempt to keep the member enrolled. This is a common tactic used by subscription companies, but it bleeds into dark pattern territory when there are excessive attempts to save the business.
Amazon’s response
Insider reports that Amazon knew about subscriber complaints, but did not address the problem, according to inside sources and six current and former Amazon employees. Insider reached out to Amazon for comment. Amazon’s spokesperson responded to the media outlet in an email, stating the enrollment and cancellation process for Prime are “simple and transparent.” Apparently, however, Amazon is trying to clarify its subscription offers and cancellation processes for Prime, Prime Video, Kindle Unlimited and Amazon Music services. Is it too late to avoid the FTC’s wrath?
Jamil Ghani, vice president of Amazon Prime, also commented on the alleged concerns.
“Customer transparency and trust are top priorities for us. By design we make it clear and simple for customers to both sign up for or cancel their Prime membership. We continually listen to customer feedback and look for ways to improve the customer experience,” Ghani said.
January 2021 complaint
In January 2021, a group of seven organizations submitted a complaint letter to the FTC citing a report, “You Can Log Out, But You Can Never Leave: How Amazon Manipulates Consumers to Keep Them Subscribed to Amazon,” by the Norwegian Consumer Council that looks at how Amazon retains members. The organizations call Amazon’s subscription model a “roach motel,” where it is easy to get in but almost impossible to escape.
“The practices examined in the report include ‘forced continuity programs that make it difficult to cancel charges, trick questions to frustrate user choice, and free trials that automatically convert into paid memberships,” which violates (sic) a consumer’s right against being charged for products sold through online negative options without a simple cancellation mechanism,” wrote Public Citizen, Campaign for a Commercial-Free Childhood, Center for Digital Democracy, Center for Economic Justice, Consumer Federation of America, Electronic Privacy Information Center and U.S. PIRG.
“Dark patterns”
Though a formal complaint has not been filed by the FTC, nor did the FTC comment on these allegations or any pending investigations, the FTC has put subscription companies on notice that subscription tricks and traps will simply not be tolerated. Subscription companies that use illegal “dark patterns,” or subscription tricks and traps, will face legal action if the companies do not provide clear, transparent information to consumers up front; fail to obtain informed consent from customers; or that make cancellation difficult or impossible. To ensure that subscription companies don’t take advantage of their subscribers, the FTC issued a new 15-page enforcement policy statement in October 2021.
Insider Take
Yes, we sound a bit like a broken record, but with good reason. Some subscription companies have used sketchy tactics to sign up new subscribers through negative option marketing and keep them by making subscriptions very difficult to cancel. This has been a problem for a long time, and even though the FTC is cracking down, there are many bad actors left to chase down. To avoid these types of allegations and complaints, the FTC wants subscription companies to follow three key requirements:
- Clearly and conspicuously disclose all material terms of a subscription product or service.
- Obtain a consumer’s express informed consent before charging the consumer for products or services.
- Provide easy and simple cancellation procedures.
For a more detailed explanation of the FTC’s expectations and regulations, read our November 8, 2021 article, “FTC Warns Against Subscription Tricks and Traps, Steps Up Enforcement.”
