FTC sues Amazon for ‘deceptive’ subscription sign-up and cancellation processes

The Federal Trade Commission has sued Amazon, accusing the online retail giant of using deceptive practices that make canceling subscriptions to its Prime product intentionally difficult for consumers. The FTC said Amazon used “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions,” and it’s seeking civil penalties and a permanent injunction to prevent future violations.

Specifically, the complaint said that consumers who attempted to cancel Prime were faced with multiple steps to accomplish the task of canceling. Consumers had to first locate the cancellation flow, which Amazon made difficult to do. They were subsequently directed to multiple pages that presented several offers to continue the subscription at a discounted price, to simply turn off the auto-renew feature, or to decide not to cancel. Only after clicking through these pages could consumers finally cancel the service.

Subscription businesses in the U.S. are facing growing scrutiny from the FTC around their cancellation practices, including publishers and media companies. The commission proposed a formal provision earlier this year that would require companies to offer more straightforward self-service cancellation mechanisms. “If you can sign up online, you must be able to cancel on the same website, in the same number of steps,” the commission said.

User-experience experts say large technology companies have become particularly adept at making it easy to sign up for recurring payments while intentionally making them challenging to cancel, but publishers are no strangers to aggressive convoluted practices, often forcing consumers to call or chat with representatives to disable auto-renewing payments.

While aggressive cancellation practices may help subscription businesses retain revenue in the short term, they increasingly risk alienating potential subscribers as consumers become increasingly familiar with them. 

Navigating a patchwork of subscription renewal laws at the state level is becoming increasingly challenging for U.S. publishers, and companies such as The New York Times are increasingly finding themselves on the receiving end of class action suits. But as the FTC steps up its focus on subscription practices, lawsuits against high-profile companies such as Amazon will increasingly set precedents and will prompt more publishers to reevaluate their cancellation processes.