• by Wendy Davis , Yesterday

Amazon has agreed to pay $2.5 billion to settle charges that it used "dark patterns" to dupe people into subscribing to Prime and thwarted cancellation efforts.

The settlement resolves a 2023 lawsuit brought by the Federal Trade Commission, which claimed Amazon violated the federal Restore Online Shoppers Confidence Act.

That law, passed in 2010, broadly requires companies to disclose terms of recurring subscriptions in advance, and offer simple cancellation mechanisms.

The deal calls for Amazon to pay $1 billion in fines and $1.5 billion in refunds to consumers.

In addition to the financial penalty, Amazon agreed to an injunction requiring the company to obtain consumers' "express informed consent" before charging them, and allow consumers to easily cancel subscriptions.

Amazon did not admit or deny the FTC's allegations.

A company spokesperson stated: "Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers."

News of the settlement comes two days after the trial started in federal court in Seattle, and one week after U.S. District Court Judge John Chun ruled that Amazon ran afoul of a provision in the Restore Online Shoppers Confidence Act that prohibits companies from collecting billing information before disclosing all material terms to consumers.

The FTC alleged that Amazon failed to obtain people's express informed consent before enrolling them in Prime, and "knowingly complicated the cancellation process.”

The agency's complaint included an allegation that Amazon used “manipulative, coercive, or deceptive user-interface designs known as 'dark patterns' to trick consumers into enrolling in automatically-renewing” subscriptions to the $140 a year Prime, which offers subscribers discounts, free delivery of many items, access to streaming video through Prime Video and other benefits.

Some of the specific allegations centered on the design of Amazon's checkout pages. 

For instance, the FTC alleged that Amazon's interfaces required shoppers to say whether they will enroll in Prime before completing a purchase.

Although Amazon allows consumers to decline enrollment, that choice is “less prominent” than the enrollment option, according to the FTC.

Earlier this month, the agency reiterated its arguments in a pre-trial memo, writing that Amazon knew that many people who enrolled in Amazon Prime did so accidentally, and that the cancellation process involved a "labyrinthian mechanism."

"Millions of consumers accidentally enrolled in Prime without knowledge or consent, but Amazon refused to fix this known problem, described internally by employees as an 'unspoken cancer,'" the FTC argued in a brief submitted earlier this month to U.S. District Court Judge John Chun in Seattle.

The agency added that Amazon named its cancellation process "Iliad," referring to "Homer's epic about the long, arduous Trojan War."

Two years ago, the Interactive Advertising Bureau backed Amazon's bid for dismissal of the charges, arguing in a friend-of-the-court brief that the FTC's suit amounted to an effort “to regulate and punish truthful statements made in advertising.”

“The FTC appears to seek to punish, ban, and regulate speech that it has not -- and cannot -- allege is untruthful by applying the label 'dark patterns,'” the group wrote, adding: “The FTC's 'dark patterns' are described ominously in its complaint, but in substance they largely include a handful of benign, ordinary statements made in the course of Amazon marketing the benefits of its Prime membership and 'design elements' chosen by Amazon, such as the use of color to draw a consumer's attention, to communicate Amazon's message that Prime is valuable.”