Advertisement

Amazon Comes Under Fire from FTC, U.S. Senate for Deceptive Membership Practices, Warehouse Safety

Amazon is under investigation by the U.S. Senate and the subject of another FTC complaint.
(Photo credit: michelangeloop - stock.adobe.com)

[Editor’s Note: This story was updated on June 22, 2023 at 3:00 pm to include Amazon’s response to Senator Sanders’ investigation.]

The U.S. Federal Trade Commission (FTC) filed suit against Amazon for what it deems deceptive practices around its Prime membership program on the same day that Amazon announced the dates for its annual Prime Day member sales event. The day prior, Senator Bernie Sanders — who chairs the Senate committee on Health, Education, Labor and Pensions (HELP) — announced plans to launch an investigation into worker safety at Amazon warehouses.

FTC Takes Issue with Amazon Prime Practices

In a lawsuit filed in federal court in Seattle, the FTC accused Amazon of “duping” millions of customers into unknowingly enrolling in its Prime membership program and making cancellation unnecessarily complicated. In a statement shared with Retail TouchPoints, Amazon called the FTC’s claims “false on the facts and the law.”

This is the third major FTC lawsuit against Amazon. A previous suit claiming that Amazon’s Ring doorbell cameras had been used to spy on some customers was settled on May 31, 2023 for $5.8 million. At the same time, the FTC said that Amazon also had agreed to pay $25 million to settle allegations that it “violated children’s privacy rights by failing to delete Alexa virtual assistant technology recordings at the request of parents and keeping them longer than necessary,” according to Reuters.

Advertisement

This latest lawsuit accuses Amazon of using “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions.” The suit further claims that the company “knowingly complicated the cancellation process for Prime subscribers who sought to end their membership.” According to the complaint, Amazon executives had even dubbed the cancellation process “Iliad” in reference to Homer’s “long, arduous Trojan War.”

The FTC has been investigating the signup and cancellation processes for the Prime program since March 2021, and the commission acknowledged in its suit that Amazon had “substantially revamped” its cancellation processes in response to FTC pressure “shortly before the filing of this complaint.” However, “prior to that time, the primary purpose of the Prime cancellation process was not to enable subscribers to cancel, but rather to thwart them.” Despite the recent changes, the FTC notes in its suit that it still “requires five clicks on desktop and six on mobile for consumers to cancel from Amazon.com.”

“The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership,” said an Amazon spokesperson in comments shared with Retail TouchPoints. The spokesperson added that the company finds “it concerning that the FTC announced this lawsuit without notice to us, in the midst of our discussions with FTC staff members to ensure they understand the facts, context and legal issues, and before we were able to have a dialog with the commissioners themselves. While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court.”

The FTC and its Chair Lina Khan have been very vocal about their intent to crack down on so-called “dark patterns,” which the commission describes as design tricks and psychological tactics used by marketers and retailers “to get consumers to part with their money or data.” “As more and more commerce has moved online, so too have these manipulative design practices, only they have grown in scale and sophistication, creating ever greater challenges for consumers,” stated a 2022 report from the FTC in which the commission put businesses “on notice” that it would be “scrutinizing these practices.”

Khan herself is known for being far from Amazon’s biggest fan: she shot to fame in 2017 (prior to her 2021 appointment to the FTC) for an academic article titled Amazon’s Antitrust Paradox, which claimed that the company unfairly dominates huge swaths of the American economy.

U.S. Senate to Investigate Amazon Warehouse Conditions Following OSHA Violations

Khan isn’t the only high-profile government figure who has their sights set on the ecommerce giant. U.S. Senator and former presidential candidate Bernie Sanders has initiated an investigation into the “abysmal safety record in Amazon’s warehouses and the company’s treatment of workers who are injured in those warehouses” under the auspices of the Senate HELP committee, which he chairs. Sanders sent a letter to Amazon CEO Andy Jassy notifying him of the investigation on June 20, 2023, and launched a website where Amazon workers can submit their stories to the committee. 

“The company’s quest for profits at all costs has led to unsafe physical environments, intense pressure to work at unsustainable rates and inadequate medical attention for tens of thousands of Amazon workers every year,” reads Sanders’ 10-page letter. “Amazon is well aware of these dangerous conditions, the life-altering consequences for workers injured on the job, and the steps the company could take to reduce the significant risks of injury. Yet the company has made a calculated decision not to implement adequate worker protections because Jeff Bezos, Amazon’s founder, and you, his successor CEO, have created a corporate culture that treats workers as disposable.”

Amazon spokesperson Steve Kelly said the company has reviewed the letter and “strongly disagrees with Senator Sanders’ assertions.” The company also renewed its open invitation for Sanders to come tour one of its facilities.

“We take the safety and health of our employees very seriously,” Kelly added in comments shared with Retail TouchPoints. “There will always be ways to improve, but we’re proud of the progress we’ve made which includes a 23% reduction in recordable injuries across our U.S. operations since 2019. We’ve invested more than $1 billion into safety initiatives, projects, and programs in the last four years, and we’ll continue investing and inventing in this area because nothing is more important than our employees’ safety.”

Amazon was cited by the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) in January 2023 for workplace safety violations at three of its warehouses, a decision that the company is appealing. Amazon has also publicly shared its safety, well-being and health report, covering data from 2022.

Featured Event

Join the retail community as we come together for three days of strategic sessions, meaningful off-site networking events and interactive learning experiences.

Advertisement

Advertisement

Access The Media Kit

Interests:

Access Our Editorial Calendar




If you are downloading this on behalf of a client, please provide the company name and website information below: