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Amazon must face FTC lawsuit over hard-to-cancel Prime membership

A federal judge declined to rule that, as a matter of law, reasonable consumers wouldn't be deceived the Amazon Prime enrollment process.

(CN) — Amazon.com failed to persuade a federal judge to toss a Federal Trade Commission lawsuit that accuses the online retailer and three of its executives of tricking shoppers into signing up for a $14.99-a-month Prime membership while making it unnecessarily complicated for members to cancel.

U.S. District Judge John Chun in Seattle on Tuesday denied Amazon's motion to dismiss the FTC's amended complaint.

Noting that a court’s determination is far from routine when it comes to deciding whether a disclosure, such as the terms of enrollment in Amazon Prime, is clear and conspicuous to a reasonable consumer, the judge said it's only in rare situations that courts grant motions to dismiss because a reasonable consumer couldn't be deceived as "a matter of law."

Given that shoppers on Amazon's website are prompted to sign up for a free Prime trial membership during the checkout process in order to get free shipping, a reasonable consumer, according to the judge, could believe that they did not have a choice and the only path to move past the page to continue checking out was to click the prominent orange button, which registered them for Prime immediately.

"Here, a reasonable consumer seeking to complete a purchase on Amazon’s marketplace could miss the small print at the bottom of the page," Chun said. "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.'"

As a result, the judge said, he couldn't conclude that the disclosures of the price and auto-renewal feature would be clear and conspicuous to any reasonable consumer, given the context in which the disclosures were made along with the size, color, and location of the text disclosing the terms.

“The FTC’s claims are false on the facts and the law," Amazon said in a statement Wednesday. "The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership. As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the opportunity to present the real facts in the case."

The FTC sued Amazon last June, claiming that the tech giant made unenrolling from Prime is so difficult that Amazon even internally named the process “Iliad,” referring to Homer’s epic about the Trojan War that spans more than 24 books and nearly 16,000 lines.

Prime members receive free Amazon delivery, faster shipping and access to Prime Video. Since its launch in 2005, Prime had more than 200 million members worldwide as of last year, and it generates billions of dollars in revenue.

According to the FTC, Amazon knowingly duped millions of consumers into unknowingly enrolling in Prime. The commission accused Amazon of employing manipulative, coercive, or deceptive user-interface designs known as “dark patterns” to trick consumers into enrolling in automatically renewing Prime subscriptions.

The primary purpose of Amazon's Prime cancellation process, the FTC said last year, was not to enable subscribers to cancel, but to stop them, and Amazon's leadership slowed or rejected changes that would have made it easier for users to cancel Prime, because those changes adversely affected Amazon’s bottom line. 

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Categories / Business, Consumers, Courts, Government

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