A U.S. judge ruled on Wednesday that Amazon violated consumer protection law by collecting Prime subscribers’ billing information before clearly disclosing the service’s full terms. The ruling by U.S. District Judge John Chun handed the Federal Trade Commission (FTC) a significant partial victory in its case accusing the online retail giant of using deceptive practices to generate Prime subscriptions. This decision puts Amazon at a legal disadvantage as the case moves toward trial, though the company maintains it has done nothing wrong.
The FTC’s case alleges that Amazon signed up tens of millions of customers for its Prime service without their consent and then created unnecessary obstacles to canceling subscriptions. The agency contends that the company employed complex and misleading cancellation methods that thwarted millions of attempts to leave the service. These actions, according to the FTC, violate the Restore Online Shoppers’ Confidence Act (ROSCA), which requires clear disclosure of terms and simple cancellation processes.
In a further blow to Amazon, Judge Chun also ruled that two of the company’s executives would be held personally liable for any violations the FTC successfully proves during the trial. The judge additionally barred Amazon from arguing that the ROSCA law does not apply to its Prime sign-up process. Reacting to the ruling, Chris Mufarrige, head of the FTC’s bureau of consumer protection, stated the decision affirms that Amazon “defrauded American consumers” and that the agency intends to make them whole.
Amazon strongly disputed the ruling and the allegations. A company spokesperson issued a statement asserting that neither Amazon nor its executives did anything wrong. The spokesperson expressed confidence that the facts presented at trial will show the executives acted properly and reaffirmed the company’s commitment to always putting its customers first. The stage is now set for a trial where the FTC will attempt to prove its allegations in court.
