• by Wendy Davis , 7 hours ago

Amazon broke a federal law by collecting billing information from Prime subscribers before disclosing the service's material terms, a judge ruled late Wednesday.

The decision, issued by U.S. District Court Judge John Chun in Seattle, came in a lawsuit brought in 2023 by the Federal Trade Commission, which charged Amazon with using "dark patterns" to dupe people into signing up for Prime subscriptions (which currently cost $139 a year), and hinder cancellations.

The FTC claimed Amazon violated the Restore Online Shoppers Confidence Act -- which broadly requires companies to disclose terms of recurring subscriptions in advance, and offer simple cancellation mechanisms.

The agency alleged in its complaint that Amazon failed to inform consumers of all "material terms" -- such as the price of Prime and that it automatically renews -- before obtaining their billing information.

The FTC also alleged that Amazon didn't obtain people's express informed consent before enrolling them in Prime, and that it "knowingly complicated the cancellation process.”

“Amazon named that process 'Iliad,' which refers to Homer’s epic about the long, arduous Trojan War,” the agency wrote in its complaint.

Amazon revised its cancellation procedures shortly before the complaint was filed, but the FTC alleged that the process continued to be problematic.

Chun awarded the FTC summary judgment -- meaning judgment before trial -- on the charge that Amazon didn't make timely disclosures before gathering billing details. He specifically found that the FTC presented images from Amazon's site that show the company collects billing information before disclosing Prime's terms.

"No reasonable jury could find in favor of Amazon when provided with this evidence," Chun wrote.

But Chun also said there were factual disputes requiring a jury trial regarding other claims in the case -- including whether the Prime cancellation procedure was "simple" and whether Prime members were duped into subscribing.

For instance, he wrote, the FTC pointed to evidence that Amazon calls Prime "free" four times in one of its checkout pages, but Amazon presented expert testimony that its design improves the chance people will notice the material disclosures.

Chun likewise said questions about the Prime cancellation process should be decided by a jury.

"There is a genuine dispute of material fact about whether a reasonable consumer would understand the Iliad cancellation method to be simple," he wrote.

"The FTC presents evidence that even entering the Iliad cancellation flow is not readily understood because the 'End Membership' button that starts the cancellation process does not, in fact, end the customer’s membership... But defendants present empirical evidence that shows consumers can readily locate, understand, and complete the Iliad cancellation flow."

The FTC and Amazon are expected to go to trial next week on the claims that Chun said should be decided by a jury.