A PYMNTS Company

FTC Suit Aims To Develop Standards For Membership Programs

 |  June 24, 2023

The FTC is reportedly sending a message to all retailers with its lawsuit against Amazon.

The Federal Trade Commission’s (FTC’s) lawsuit alleging that the retailer uses deceptive tactics to sell its Prime subscription program is likely meant to put other merchants on notice and to develop standards for these sorts of membership programs, Reuters reported Friday (June 23).

Other retailers have also been sued in recent years for practices involving their membership programs that promise benefits like free delivery, tech support and discounts, according to the report.

One lawsuit targeted an automatic enrollment that required consumers to opt out to avoid monthly charges and did not disclose all the terms and conditions, the report said.

Read more: FTC Eases Standards For Competition Lawsuits

Another legal challenge involved a free trial that was followed by automatic charges, obstacles to cancelling the subscription and failure to acknowledge cancellations, per the report.

A third lawsuit involved an online purchase that automatically enrolled the buyer in two subscription programs and provided no online option to cancel the subscriptions when they were discovered, according to the report.

The FTC announced its lawsuit against Amazon on Wednesday (June 21), alleging that the company had used practices that “tricked and trapped” consumers into Prime recurring subscriptions.

The complaint alleges that Amazon has used “dark patterns” to trick consumers into enrolling into the program and makes its cancellation process complicated.

It also alleges that although the company has revamped its cancellation process for at least some subscribers, “the primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them.”

In another recent case, the FTC announced in April that it is returning $1.1 million to consumers who were charged for deceptive “free trial” offers.

This move resulted from a settlement announced in 2018 between the FTC and companies that it had sued, alleging the companies had told consumers they would be charged only a small fee for the trial products but then charged them for ongoing subscriptions until the consumers canceled.

A month earlier, in March, the FTC proposed a new “click to cancel” provision that would require businesses to make canceling memberships as easy as signing up for them.