[Reuters] Amazon duped millions of consumers into enrolling in Prime, US FTC says

[lake]

Some of the wording in the complaint is a little loosey goosey suggesting the FTC does not have evidence of the exact behavior.

This could be an attempt to turn these executives, and strengthen the case.

[ASV_Vites]

[papy]

Exactly. Shine the light, catch the cockroaches.

So much of the added information is how the FTC only became aware of certain aspects because of whistleblowers and leaks to the media.

• Internal documents show Amazon has for years knowingly tricked people into signing up for Prime subscriptions. ‘We have been deliberately confusing,’ former employee says. - Business Insider, March 14, 2022 - Eugene Kim

245. On March 14, 2022, Business Insider published information leaked from current and former Amazon employees regarding the problems with Amazon’s Prime checkout enrollment flow and the Iliad Flow. The Commission quickly ascertained that Amazon had failed to disclose much of the now-leaked documents and information to the Commission, despite the fact that at least some of it was responsive to the outstanding CID. Amazon withheld the information by identifying combinations of search terms and custodians it knew would not surface the most probative—and inculpatory—material. Among other things, Amazon failed to identify as custodians key individuals who communicated extensively about the Prime enrollment and cancellation processes, including the most knowledgeable employees on these subjects. Amazon also failed to identify as custodians individuals the Business Insider article named as key decision-makers regarding the Nonconsensual Enrollment problem and the Iliad Flow.

246. In contrast, two of the eight custodians identified by Amazon performed little work germane to the investigation. But for the Business Insider article, Amazon’s failure to identify relevant custodians and search terms may have gone undiscovered.

247. Pursuant to its reservation of rights, on April 19, 2022, the Commission issued an extensive follow-up demand for additional information. Amazon did not comply with this demand, instead making the incredible claim that doing so would take 30 months.

248. On June 30, 2022, the Commission issued an additional CID to Amazon as well as CIDs to various current and former employees seeking documents and testimony. Amazon also did not comply with the June 30, 2022 CID.

249. Instead, on August 5, 2022, Amazon and certain individual CID recipients (including Defendants Lindsay, Ghani, and Grandinetti) petitioned the Commission to quash the June 2022 CIDs. On September 21, 2022, the Commission denied the petition in every material respect. Three Commissioners noted with respect to one legal question Amazon raised as a basis to delay or avoid providing testimony: “The issue raised by this dispute is just one of many challenges facing FTC staff when pursuing complex investigations of targets that may perceive benefits to prolonging discovery.” Although the Commission ordered Amazon and the individual petitioners to fully comply, they did not.

Amazon Prime FTC suit: How Insider's investigation led to a crackdown on the...

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And this is exactly the kind of behavior that leaves too many corporations

@papy

Needing oversight to prevent assholery

[papy]

Just to clarify, this FTC case against Amazon is on behalf of Buyers who were (allegedly) duped/forced into Prime memberships and renewals.

Today’s FTC case against Amazon is on behalf of 3P Sellers regarding (alleged) monopoly issues and should be discussed at [FTC] FTC Sues Amazon for Illegally Maintaining Monopoly Power.

Thanks, all!

[dwat0870]

Without reading the entire thread again, I believe this is the one where they named a number of executives, correct? (Yes, I’m tired and too lazy to look at it all).

If it is, has anyone been looking for any Section 144 stock filings by those named to see if they are planning on turning into witnesses instead of defendants?

I would think that at least some of those guys would be high enough on the food chain to have restricted stock.

[papy]

Amazon has filed a Motion to Dismiss for the FTC’s June 2023 Prime enrollment lawsuit.

https://www.reuters.com/legal/amazon-defends-prime-program-bid-defeat-ftc-lawsuit-2023-10-19/

Read Amazon’s motion here (pdf download): https://fingfx.thomsonreuters.com/gfx/legaldocs/byprrbxzjpe/Amazon%20MTD%20FTC%20Prime%2020231018.pdf

For a bit of a context reminder:

[Reuters] Amazon duped millions of consumers into enrolling in Prime, US FTC says

Specific details on those “dark patterns”: Misdirection Confirm-shaming Obstruction, or the “Roach Motel” Interface interference Forced action Sneaking

[papy]

@papy

The FTC filed suit in federal court in Seattle and said it alleged that “Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime.” The FTC said Amazon used “manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions.”

Found some more info on “dark patterns” relevant both to this FTC lawsuit against Amazon and today’s FTC’s settlement with Chargeback911 (who helped “dark pattern” clients deceptively challenge legitimate chargebacks).

Amazon: The Prime Target in FTC Crackdown

In September of 2022, the FTC issued a 48-page dark patterns report, titled “Bringing Dark Patterns to Light.”

It’s important for ecomm Sellers to understand strategies that are being challenged legally, even if those strategies have been in widespread use or considered acceptable within the industry.

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ETA: Some excerpts…

[papy]

Some updates on the FTC v Amazon Prime case (not the monopoly case):

1. 12 June 2024: “The Court sets trial in this matter for 6/9/2025.” FTC lawsuit over Amazon’s Prime program set for June 2025 trial | Reuters

2. 28 May 2024: The judge denied Plaintiffs’ Defendants’ motion to dismiss the individual Amazon Prime executives from the case and/or dismiss the whole case. US judge rejects Amazon bid to get FTC lawsuit over Prime program tossed | Reuters

3. All publicly available records for this case can be found here: Federal Trade Commission v. Amazon.com Inc (2:23-cv-00932), District Court, W.D. Washington | CourtListener

[dwat0870]

@papy

The judge denied Plaintiffs’ Defendants’ motion to dismiss the individual Amazon Prime executives from the case

I suspect that this will be really important. Watch news notices for any sudden ‘retirements’ or ‘left the company’ notices coming out of Amazon to see which rats are leaving a sinking ship.

While this is not a criminal situation some may want to protect their assets by offering some insider information in return for leniency/dropped charges!

[GGX]

Amazon has D&O insurance for sure, and these guys have millions if not billions worth of stock options. Nobody’s leaving over this.

Personal liability for a corporation’s actions is really only relevant if the corporation cannot pay for it. In this situation Amazon will ultimately foot the bill for all of this.

On another note, if someone’s not a prime member I would recommend they not buy anything from Amazon. The checkout process is indeed a pain in the ■■■ if you’re not prime since they pressure you into signing up for prime half a dozen times.

[papy]

@papy

Specific details on those “dark patterns”:

1. Misdirection
2. Confirm-shaming
3. Obstruction, or the “Roach Motel”
4. Interface interference
5. Forced action
6. Sneaking

1, 3, 4, and 5 at play in this new FTC/DOJ case against Adobe and (like Amazon) individual Adobe executives under ROSCA:

According to the complaint, when consumers purchase a subscription through the company’s website, Adobe pushes consumers to its “annual paid monthly” subscription plan, pre-selecting it as a default. Adobe prominently shows the plan’s “monthly” cost during enrollment, but it buries the early termination fee (ETF) and its amount, which is 50 percent of the remaining monthly payments when a consumer cancels in their first year. Adobe’s ETF disclosures are buried on the company’s website in small print or require consumers to hover over small icons to find the disclosures.
…
The complaint also alleges that Adobe’s cancellation processes are designed to make cancellation difficult for consumers. When consumers have attempted to cancel their subscription on the company’s website, they have been forced to navigate numerous pages in order to cancel.

When consumers reach out to Adobe’s customer service to cancel, they encounter resistance and delay from Adobe representatives. Consumers also experience other obstacles, such as dropped calls and chats, and multiple transfers. Some consumers who thought they had successfully cancelled their subscription reported that the company continued to charge them until discovering the charges on their credit card statements.

FTC Takes Action Against Adobe and Executives for Hiding Fees, Preventing...

[GGX]

Auto-billing subscriptions in general are kind of problematic since you can’t turn them off on the credit card side, unless you call them to block the merchant. I’ve done this a few times when a subscription was hard to cancel or when I got charged for something I didn’t order (this also happened once, I bought something that auto-subscribed you to get more every 3 months). In these cases I’ll hit them with a chargeback rather than go through the merchant, partly to be punitive by getting them a chargeback fee (and if more people did this, it would get the merchant flagged as high risk), and partly because those types of merchants intentionally make it difficult to get a refund.

Too many people just eat the cost instead of hitting the merchant with a chargeback, and this is part of the problem. It makes it rewarding for companies to do this, whereas if even 1 out of 4 people who they scam hit them with a chargeback, their merchant would get flagged as high fraud/risk.

[Pepper_Thine_Angus]

Small update on this:

FTC asks to delay Amazon Prime deceptive practices case, citing staffing...

[Pepper_Thine_Angus]

And update

[Dogtamer]

@Pepper_Thine_Angus

And update

Just read Stefania Palma & Rafe Uddin’s full FT article (link).

At this risk of skating away on the thin ice of a new day (and with all due respect where it’s due), I’d hazard to say:

Betcha By Golly, Wow

You ain’t the lawyer we’ve been waiting for…

[ASV_Vites]

Like Bezos’s about face with the Washington Post, and massive donations, and $40M to Melania for some documentary that literally nobody cares about doesn’t have something to do with this delay and eventual oops, we forgot about this case.

Right…

I know this is a bit political but it’s also true.

[papy]

Not sure what I think about this. I read the lawyer’s reasons for requesting the delay, and they seemed reasonable (losing most of the case assigned staff, having no office or storage space, rules changes about requesting materials only using the cheapest thus slowest options, etc) but also unlikely to improve soon.

Initially, I thought the quick backtrack was a reassurance that this team would get the resources they need despite any other chaos, but now I’m not sure that’s the case. It almost seems more like a face-saving move (at best–I won’t speculate here about at worst) than a promise that justice won’t be undeterred.

FWIW, I believe in accountability and clarity around the unique issues raised by the FTC against Amazon, but if it wasn’t Amazon, it would have been some other company.

[dwat0870]

@papy

Initially, I thought the quick backtrack was a reassurance that this team would get the resources they need despite any other chaos, but now I’m not sure that’s the case.

My ‘conspiracy theory’ go pretty deep and I’ve been following politics (not that this would ever be political) since the first election I folded newsletters for in 1960.

Ponder this – The attorney was correct. The FTC ‘correction’ was designed to move things along.

Now, things start to move through the process and suddenly the FTC is NOT able to meet any deadlines that the judge imposes.

Sorry, case dismissed – with or without prejudice – due to the failure of the Government to deliver the case in court.

At least two or three people end up happy…

[lake]

There have been some key departures from the FTC with the change of administration, and perhaps one of them was a key driver more motivated than solely by the evidence.

It would not be suspicious to see difficulties in moving forward in the absence of that individual, but that might not mean a dismissal is in the offing.

We know that I would not be upset by a dismissal, but I do not expect to see one.

[dwat0870]

@lake

There have been some key departures from the FTC with the change of administration,

And they continue to fall –

From Inc.com this morning " Fired FTC Commissioner Criticized Conditions at Amazon Just Before Dismissal"

" [President Trump fired the last two Democrats on the Federal Trade Commission Tuesday night, a move immediately followed by questions about the legality of their removal and confused speculation about why it happened."

Looks like Bezos bought some time before anything happens.

“Looking at 2019 data, a Senate committee found 1 in 10 workers suffered an injury serious enough to require official reporting to OSHA—reportedly a rate that’s double the industry average.”