The Federal Trade Commission is suing Amazon for allegedly tricking customers into signing up for the company’s Prime membership and making it difficult to cancel that subscription service, providing expedited free shipping and access to its streaming entertainment service. You’re right if this strikes you as an odd fight for the FTC to pick.
Prime has 148.6 million members. Amazon is among the highest-rated companies for favorability and trustworthiness, according to multiple polls. Last year, JPMorgan estimated the actual value of the $14.99 monthly, or $139 annual Prime subscription, is as much as $1,000. Even at the apex of stress on the company, while most of America was stuck at home for fear of COVID-19, customer dissatisfaction was still low and mostly stemmed from shipping delays.
The FTC’s specific accusations against the world’s largest online retailer are no less strange. In court documents, the agency claims that Amazon “has knowingly duped millions of consumers into unknowingly enrolling in its Amazon Prime service” and “used manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions.”
Dark patterns are website design elements intended to lead users toward certain choices. In this case, those preferred outcomes are subscribing to and not canceling Prime membership.
To be sure, Amazon tries to persuade its users to join Prime. It also seeks to make that process easy for aspiring subscribers via website design choices, but that is far from illegal. Consumers are urged to join rewards programs at the grocery store in return for similar savings in the brick-and-mortar world with little objection from regulators. Besides, a hefty 35% of Amazon customers do not enroll in Prime. As the learning curve for online commerce flattens with users’ experience, claims of consumers being “dupes” are increasingly unconvincing.
The FTC’s twin grievance that Amazon used “dark patterns — manipulative design elements that trick users into making decisions they would not otherwise have made,” to make canceling Prime membership unacceptably difficult is equally exaggerated.
It takes six clicks to cancel a Prime subscription. Furthermore, the change in your account status will be reflected immediately. You won’t receive those same conveniences when applying for a passport, obtaining a TSA pre-check or even filing comments for the FTC. To be persnickety, that last task requires one more additional click than unsubscribing from Prime. Regulatory agencies that live in glass houses shouldn’t throw stones.
While the FTC is using its limited resources to litigate a solution in search of harm, the agency’s own report found consumers lost almost $8.8 billion to actual fraud in 2022. That’s up more than 30% from the previous year. The FTC’s consumer protection bureau would be wise to leave the details of a home-delivery e-commerce service alone and turn their attention to these more legitimate and urgent matters.
This senseless case against Amazon is a perfect and cautionary example of an agency acting to grow its scope of power on the taxpayer dime. Millions of customers benefit from Prime, but no good will come from meritless regulatory actions. Consumers need less government meddling and more quality-of-life-enhancing innovations from the private sector. And the FTC needs something better to do.
Jessica Melugin is the director of the Center for Technology and Innovation at the Competitive Enterprise Institute/InsideSources