The agency has recently targeted subscription cancellations, proposing a rule in March that would require companies to make it as easy to cancel as it is to sign up. 

The U.S. Federal Trade Commission sued Inc. on Wednesday. The FTC alleges the ecommerce giant Amazon duped consumers into signing up for its Prime membership service and deliberately made it hard to cancel.

The consumer protection agency filed a lawsuit in Washington state federal court claiming that Amazon’s website manipulates users into enrolling in Prime. Subscribers pay $139 a year for the service, which provides privileges like speedy free delivery, video streaming and access to 100 million songs. The cancellation process for Amazon Prime is also difficult to find and requires multiple steps, the FTC alleged. The FTC said Amazon referred to the process internally as the Iliad, after Homer’s lengthy epic poem.

The agency has recently targeted subscription cancellations, proposing a rule in March that would require companies to make it as easy to cancel as it is to sign up.

The FTC filed the lawsuit on the same day Amazon announced its annual Prime Day sale and Walmart announced its Walmart+ Week sale.


Amazon is No. 1 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers. Walmart ranks No. 2.

Amazon is also No. 3 in the Online Marketplaces database, which ranks the 100 largest global marketplaces. Walmart is No. 9 in that database.

FTC suit against Amazon

In its complaint, the FTC said consumers must click through five pages on the desktop web store or six on the mobile app to cancel Prime. The FTC also claimed Amazon failed to turn over information investigators sought, taking more than 18-months to produce materials.

The FTC said Amazon’s tactics violate a 2010 consumer protection law designed to protect online shoppers. The agency previously used the law to ding MoviePass and its former parent company, Helios and Matheson Analytics Inc., Intuit Inc.’s Credit Karma and Ericsson’s internet phone service Vonage over subscription auto-renewal and cancellation practices. Vonage paid $100 million to settle the FTC’s suit and Credit Karma $3 million to reimburse consumers.


“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.

Amazon didn’t immediately respond to a request for comment.

Competing membership programs

Prime membership has been a key differentiator for Amazon, helping it convert occasional shoppers into loyal devotees who make the company their default choice when shopping online. Walmart Inc., Amazon’s biggest competitor, launched the Walmart+ subscription in 2020 for $98 a year, offering many of the same benefits.


About 167 million Amazon shoppers had Prime memberships as of March. That’s unchanged from a year earlier, according to market research firm Consumer Intelligence Research Partners. More than 90% of consumers who try a free 30-day Prime membership become paying members, according to the Chicago research firm.

Analysts say Prime membership has stagnated in the country since Amazon boosted the annual price from $119, a sign that a subscription is less attractive to consumers struggling with a stubbornly high inflation rate.

In the U.S., Prime members spend about twice as much on Amazon as non-Prime members. Amazon’s revenue from subscription services, which is mostly from Prime memberships, was $9.66 billion in the quarter ended March 31. That’s about 7.6% of its overall revenue for the period.

Amazon changed its process for cancelling Prime subscriptions last summer after pressure from the European Commission and national consumer watchdogs. The company introduced a simplified two-click process.


The suit is the third the FTC has filed against Amazon in the past month. The company agreed to pay $30.8 million to settle allegations that it failed to delete data about kids collected by its Alexa speakers and that its Ring doorbells and cameras illegally spied on users. Amazon said it disagreed with the FTC’s allegations but agreed to settlements to resolve the cases.

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