Amazon.com Inc. was sued Wednesday by the U.S. Federal Trade Commission, which alleged the e-commerce giant “duped” millions of consumers into enrolling in Amazon Prime subscriptions without their consent.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in a statement.
The FTC said in its complaint, filed with the U.S. District Court for the Western District of Washington, that Amazon also knowingly made the cancellation process complicated in an attempt to stop customers from dropping their Prime subscriptions.
“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 said in its complaint.
An Amazon Prime subscription costs $ 14.99 a month, or $ 139 a year.
“The FTC’s claims are false on the facts and the law,” Amazon said in an emailed statement to MarketWatch. “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.”
Amazon’s stock AMZN, -0.45% slipped 0.5% in afternoon trading, but pared earlier losses of as much as 1.5%. It has pulled back 1.5% since closing at a nine-month high of $ 127.11 on June 15.
The FTC said that not only did Amazon make canceling a Prime subscription complicated, the company made the option to buy items on Amazon’s website without subscribing to Prime more difficult for people to find. And in some cases, the button presented to complete purchases didn’t clearly state that customers would also be signing up for Prime.
The vote authorizing the FTC staff to file a complaint was 3-0.
“We also find it concerning that the FTC announced this lawsuit without notice to us, in the midst of our discussions with FTC staff members to ensure they understand the facts, context, and legal issues, and before we were able to have a dialog with the Commissioners themselves before they filed a lawsuit,” Amazon said. “While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court.”
The complaint announced Wednesday comes less than a month after the FTC and the U.S. Department of Justice charged Amazon for violation of child-privacy laws by keeping recordings of children on Amazon’s Alexa voice-assistant service forever and for undermining deletion requests.
And the FTC suit comes on the heels of Amazon’s announcement that its Prime Day sales event will take place July 11-12.
Amazon’s stock has run up 49.0% year to date, while the S&P 500 SPX, -0.26% has gained 14.1%.