FTC Alleges Amazon Executives Aware of Deceptive Practices Around Subscriptions

The Federal Trade Commission (FTC) has named three senior Amazon executives in an amended complaint, alleging their involvement in deceptive practices related to the company’s Prime program.

The executives, Neil Lindsay, Russell Grandinetti and Jamil Ghani, have been accused of being aware of issues around enrolling consumers into Prime without their consent and making it challenging for them to cancel their subscriptions, the FTC said in a Wednesday (Sept. 20) press release.

Reached for comment by PYMNTS, Amazon Spokesperson Tim Doyle said in an emailed statement that the FTC’s decision to add the three leaders to the case against the company is “unwarranted under the facts and the law.”

“These leaders have worked tirelessly to make Prime an exceptional program that customers love, and they have our full support,” the statement said. “To claim that their efforts were made in anything but the utmost good faith is unfounded and represents a radical departure from the FTC’s own standards for such claims. We’ve always made it clear and simple for customers to sign up for and cancel Prime, and we look forward to demonstrating that the FTC’s claims to the contrary are wrong.”

According to the FTC’s amended complaint, Lindsay, Grandinetti and Ghani were fully aware of the problems faced by consumers who were unwittingly enrolled in Prime and encountered obstacles when attempting to cancel their subscriptions, the release said. The complaint states that the executives were informed about these issues through emails, meetings and presentations, and were encouraged to take corrective action. However, they allegedly chose not to act.

The complaint further alleges that Amazon and its executives deliberately impeded user experience changes that would have curtailed nonconsensual enrollment, per the release. These changes were reportedly avoided or reversed because they would have had a negative impact on Amazon’s profitability. Internal memos cited in the complaint reveal that executives believed clarifying the enrollment process would cause a “shock” to business performance, leading them to favor maintaining the status quo.

The FTC complaint also highlights Amazon’s allegedly labyrinthine cancellation process for Prime, referred to as “Iliad,” according to the press release. The complaint suggests that this process was intentionally convoluted to discourage users from canceling their subscriptions.

Despite some changes made by Amazon under pressure from the FTC, the Iliad cancellation flow remained in place for an extended period, the release said. The complaint contends that Amazon’s leadership, including Lindsay, Grandinetti and Ghani, deliberately hindered efforts to simplify the process, as it would have negatively impacted the company’s profits.

The unredacted complaint also includes excerpts from an internal document that refers to the company’s use of “misdirection” to enroll consumers in Prime, per the release. This involved prominently displaying a button saying “Get FREE Two-Day Shipping” while concealing a small blue text link for making a purchase without joining Prime. The complaint also reveals a company policy that directed customer service agents to direct cancellation requests to the Iliad flow, despite having the ability to process cancellations themselves.

The FTC’s lawsuit is sure to raise larger debate over, and perhaps a retooling of, subscription models in general, PYMNTS reported in June.