Now, Amazon is under unprecedented legal and financial pressure. Consumer advocates have long urged reforming the company’s practices. The Federal Trade Commission (FTC) has recently charged the company with violating the law regarding its subscription service, Amazon Prime. Accused by U.S. District Judge John Chun of recently releasing 70,000 documents hidden from the FTC, the company now faces crackdown by the agency. He summarized their actions as “the equivalent of bad faith.” The FTC’s antitrust case against Amazon has sparked important conversations over consumer protection and corporate transparency.
In July, Amazon touted astounding net revenue of more than $12 billion from its subscription services. That was a whopping 12% better than the previous year. Yet this remarkable financial success has not protected the company from allegations it misled customers about the terms of Prime membership. The FTC contends that Amazon’s disclosures about the material terms of Prime membership are not “clear and conspicuous,” which is a critical element in evaluating consumer rights under the Restore Online Customers’ Confidence Act, a law that Judge Chun affirmed applies to Amazon’s Prime service.
The case highlights a troubling issue: millions of consumers may have been accidentally enrolled in Prime without their knowledge or consent. According to internal documents, Amazon employees classified this issue as an “unspoken cancer.” Even still, the company allegedly would not agree to address the concern. Amazon’s Prime membership cancellation process has faced criticism as well. The technique, named “Illiad,” requires that consumers acknowledge their cancellation three separate times on three different pages. Advocates believe that this creates an added layer of complexity that is completely unnecessary.
And the legal ramifications may go further than the company. If the jury rules in favor of the FTC, Amazon high executives Neil Lindsay and Jamil Ghani are personally liable. Further, a third executive, Russell Grandinetti, may be found liable by the jury, based on the jury’s conclusion.
The FTC’s scrutiny of Amazon follows its earlier antitrust lawsuit, which accused the company of monopolistic control over online markets. This lawsuit is yet another arrow in Amazon’s legal quiver. That’s merely a few months after the Federal Trade Commission did the same over customer sign-ups.
Despite these significant challenges, Amazon has apparently not given up on its ongoing wooing of the political establishment. That’s not only because of the half million dollars that in December, the company donated to former President Trump’s inauguration fund. And so it’s begun streaming “The Apprentice.” This show had an incredible influence on raising Trump’s public profile in the run-up to his formal announcement of his presidential campaign. Concurrently, Amazon is reportedly working on a documentary that promises an “unprecedented behind-the-scenes look” into Melania Trump’s life as first lady.
Despite all of these controversies, Amazon continues to pour money into the idea that customer satisfaction comes first. A representative stated, “The bottom line is that neither Amazon nor the individual defendants did anything wrong — we remain confident that the facts will show these executives acted properly and we always put customers first.”
They added, “Occasional customer frustrations and mistakes are inevitable — especially for a program as popular as Amazon Prime.”
As this case develops, it raises a host of crucial questions about consumer rights. It further upends fundamental tenets of corporate accountability in the rapidly evolving digital marketplace. Amazon stands to be greatly affected by the jury’s decision. It could establish significant precedents for the future of subscription services.
