Anyone who ever shopped at Amazon.com and accidentally wound up with an unwanted “Prime” account may get a check in the next 90 days.
The FTC announced last Thursday it has secured a “historic” $2.5 billion settlement against the company. The agency alleged that Amazon used deceptive methods to sign up consumers for Prime subscriptions and made it exceedingly difficult to cancel.
Amazon will pay $1.5 billion in refunds to an estimated 35 million customers affected by “deceptive enrollment practices,” and another $1 billion in civil penalties.
The FTC website states:
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said FTC Chairman Andrew N. Ferguson. “The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription. Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again. The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
The FTC has charged Amazon and several Amazon executives with knowingly misleading millions of consumers into enrolling in Prime, violating the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
Some of us can relate. After reviewing the final selections in an online “shopping cart,” the customer has multiple choices for payment. The choices might have included something like, “Get an immediate huge discount and free shipping and a free Prime subscription for 30 days.” Maybe there was a button to click, saying, “No thanks.” But before the final purchase was confirmed, two more offers would pop up. It was like reading the fine print on a contract – you had to be careful or you might agree to the “free trial” without realizing it.
Or maybe you thought, “Sure, I’ll take this offer and cancel before the 30 days are up.” Amazon was counting on you to forget about it until the bill showed up on your credit card. Somehow, you’d be on the hook for another two months unless you made it clear you wanted it ALL canceled – last month, this month and next month. At least, that’s how some of us remember it. Was it just me?
According to the FTC, the settlement agreement requires Amazon to stop their unlawful practices and make meaningful changes to the Prime enrollment and cancellation flows by:
• including a clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, “No, I don’t want Free Shipping.”
• including clear and conspicuous disclosures about all material terms of Prime during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures.
• creating an easy way for consumers to cancel Prime, using the same method that consumers used to sign up. The process cannot be difficult, costly, or time-consuming and must be available using the same method that consumers used to sign up; and
• paying for an independent, third-party supervisor to monitor Amazon’s compliance with the consumer redress distribution process.
AARP reports customers are eligible for a payout if they enrolled in Amazon Prime any time from June 23, 2019, to June 23, 2025. Some customers will receive up to $51 automatically. Others will need to submit a claim.
Amazon issued a statement about the settlement: “Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years.”
Fair enough. Amazon is only the third company hit with a ROSCA settlement. While they are the most visible, they weren’t the most deceptive. Last year, I ordered a “free” coffee mug (just pay shipping and handling!) and ended up making a monthly contribution to a for-profit social enterprise.
Kudos to the FTC for cracking down on fraudulent online practices. Meanwhile, it is still the responsibility of individuals to be savvy online shoppers and to maybe take another look at a local store before going online at all.
