Amazon accuses FTC of harassing founder Jeff Bezos and CEO Andy Jassy as agency probes if firm uses ‘deceptive tactics’ to lure users into Prime memberships that are ‘roach motels’ where escape is an ‘ordeal’
- Amazon says the FTC’s probe has become ‘unduly burdensome’ in a new filing
- The tech giant is being investigated for alleged manipulative tactics regarding its Prime subscription offering
- Amazon Prime has at least 200 million members and generated $8.7 billion in subscription revenue in the second quarter
- The FTC is also examining whether Amazon makes it too difficult for users to cancel a Prime membership
Amazon has accused the Federal Trade Commission of harassing its top executives as the regulator pushes forward with its probe into whether the company uses ‘deceptive practices’ to lure customers into signing up for Prime memberships and then makes it very difficult to quit the program.
In a filing dated August 5 that was made public on Monday, Amazon claimed the FTC’s investigation had become ‘unduly burdensome’ on executives and employees after 19 were served with subpoenas in order to give evidence.
The tech giant called on the agency to ‘quash or limit’ its demands – which it claimed served no purpose other than to ‘harass Amazon’s highest-ranking executives and disrupt its business operations,’ according to the filing.
The FTC has been probing whether the company uses ‘deceptive practices’ to lure customers into signing up for Prime memberships and then makes it very difficult to quit the program.
For almost a year and a half, the agency led by Big Tech critic Lina Khan has been slowly deepening its investigation of how Amazon allegedly uses ambiguous language and design features in its Prime sign-up and cancellation processes.
Internal documents obtained by Business Insider in March revealed that Amazon has been concerned since 2017 that the user interface designs on Amazon.com have made customers feel manipulated into signing up for Prime – the perks-filled subscription service had 200 million members as of last year and costs $139 per year in the U.S. – generating $8.7 billion in revenue in the second quarter.
Amazon said it would be a ‘tremendous burden’ to have founder Jeff Bezos (above) testify about ‘granular’ matters
For instance, if a user clicks on ‘Get FREE Two-Day Delivery with Prime’ at checkout – without any additional confirmation step – they are automatically enrolled into a 30-day free trial of Prime and that later converts into a paid membership unless the user cancels it.
Amazon was aware of the concerns about manipulation for years and did not take serious action, according to the internal documents and six current or former employees who spoke with Insider. Anyone wishing to cancel their Prime subscription will also face a series of challenging hurdles.
‘Amazon Prime’s subscription model is a ‘roach motel,’ where getting in is almost effortless, but escape is an ordeal,’ a letter from seven groups led by Public Citizen states. ‘As a general rule, it should not be more difficult to unsubscribe than to subscribe from a digital service.’
In order to cancel, consumers must click through multiple pages, where each page has other links that ‘create confusion’ or try to nudge users back into the subscription, according to the January 2021 letter from Public Citizen, a nonprofit consumer advocacy group.
Meanwhile, Amazon is pushing back on the FTC’s demands in the latest filing.
‘Staff’s handling of this investigation has been unusual and perplexing,’ Amazon says in the petition.
Readying founder Jeff Bezos and CEO Andy Jassy to testify on ‘granular’ details would be a ‘tremendous burden’ on the company – which asked regulators for more time to provide the required information.
The FTC, which has multiple tech firms in its sights, has extended its probe of Amazon to its ebook service Kindle Unlimited and music streaming platform Amazon Music. This probe is being led by the consumer-protection division and is separate from the antitrust probe of Amazon. In June 2021, the Seattle-based company called on Khan to recuse herself from the investigation because of her previous academic work on antitrust matters and criticism of the ecommerce giant.
Jamil Ghani, VP of Amazon Prime, said in a previous statement to Insider: ‘Customer transparency and trust are top priorities for us. By design we make it clear and simple for customers to both sign up for or cancel their Prime membership. We continually listen to customer feedback and look for ways to improve the customer experience.’
Executives in addition to Bezos and Jassy who were served with subpoenas included Doug Herrington, Amazon’s head of retail, Russell Grandinetti, head of international consumer, as well as former executives Dave Clark, who had been head of worldwide consumer, and Greg Greeley, ex-head of Prime.
DailyMail.com reached out to Amazon for comment.
‘Amazon Prime’s subscription model is a ‘roach motel,’ where getting in is almost effortless, but escape is an ordeal,’ a 2021 letter from seven groups led by Public Citizen states