Amazon is being sued by the FTC (Federal Trade Commission) for forcing customers into Amazon Prime memberships. The government body recently announced their new “Click to Cancel” rule, which is aimed at making it easier for customers to cancel any subscription they may have with a business.

Shares for the Seattle-based big tech titan fell by 1.5% right after the FTC filed their lawsuit against Jeff Bezos’ e-commerce giant.

Clearly, the FTC is not playing games when it comes to consumer protection. If you run an online store, here’s all you need to know to avoid the dark patterns and “Click to Cancel” crackdown.

Quick FTC vs Amazon Lawsuit Breakdown

The FTC’s claims are that Amazon tricks customers into continuing their Prime membership by making it too difficult to cancel.

To do so, Amazon used dark patterns—marketing tactics aimed at deceiving customers or forcing an unwanted action to take place—to make continuing or signing up for Prime just one click away, but canceling a daunting process.

The Prime signup and cancellation process has been under FTC investigation since March of 2021. However, news of this lawsuit is still sending shockwaves of fear throughout the industry.

In fact, in 2021, Amazon settled with the FTC for $62 million over claims that it withheld tips from drivers.

The FTC lawsuit actually comes just one day after a US Senate committee announced its own investigation into Amazon labor practices. An Amazon spokesperson has denied the accusations.

The Dark Pattern Tactics Used by Amazon

Dark patterns have been a tactic—and issue—utilized by online businesses since essentially the dawn of the internet and ecommerce. That fact is unsurprising, at best. If it makes a company money and it’s not illegal, then why not?

The fact now is that dark patterns are illegal. Regulators are also recently taking measures against companies who use these nefarious business practices, which Amazon is guilty of. No wonder “Amazon’s antitrust paradox” is gaining traction…

Dark patterns are user-interface designs and manipulative tactics designed to confuse and mislead consumers into making decisions they don’t necessarily want to make. For example, companies might promote one product but sell another; or shame customers when they decline an upsell or subscription offer/cancellation.

The tactics used by Amazon include:

–       On mobile, displaying a big yellow “FREE two-day shipping” button but a tiny blue “no thanks” button to decline. Shoppers might not see the button to decline the offer and feel obliged to subscribe to Amazon Prime.

–       There is no indication of Amazon’s automatically-renewing Prime subscriptions.

These are tactics that no business should utilize, let alone one as large as Amazon. As a ecommerce giant, the company doesn’t need to trick customers into subscribing—they make billions as-is!

Amazon Prime Day is coming up…we wonder what the tech giant has in store for consumers.

Our merchant accounts help you stay secure and compliant. Speak with us about your business today!

FTC’s “Click to Cancel” Rule and How It Applies to Amazon

We like to believe that businesses don’t actively decide to deceive consumers. At best, bad tactics aren’t used nefariously, but naively. With Amazon, though, that’s not the case.

The Prime cancellation process was designed to be a labyrinth for users, even going so far as to be internally named “Iliad” after the epic poem by Homer. Amazon executives Neil Lindsay, Russell Grandinetti, and Jamil Ghani are accused of purposely “slowed, avoided, and even undid” adjustments designed to make the enrollment/unenrollment in the Prime program a better understood process.

That’s exactly what Click to Cancel is designed to accomplish: a clearer, easier, more streamlined way of canceling a subscription.

According to the FTC act, businesses must provide a method of cancellation that matches the method of enrollment. If a user subscribes online, there must be an online unenrollment method. The same goes for over the phone, email, and direct mail.

Amazon actually does offer online cancellations, but they make it too difficult, and that’s another stipulation of the Click to Cancel rule. You see, cancellations must be easy, not labyrinthian. Because Amazon mirrors the Trojan War, in that it takes ten years to complete (joking), the process does not align with the requirements set in the FTC rule.

How You Can Avoid the FTC Coming for Your Business

It’s simple: don’t use dark patterns and make cancellations easy.

You also need to send notifications about recurring and upcoming payments related to your subscription.

These are all easily accomplished feats. In the previous linked text, we’ve outlined exactly what dark patterns and Click to Cancel entails, so you can follow that guide and secure your business.

If you do happen to implement these tactics and are afraid that removing them will result in a serious decline in sales, then you need to review your product. If you have to trick consumers into purchasing, then your product is either too expensive or not usable as advertised.

Security in All Areas of Business

Staying out of the FTC’s watchful eye isn’t always such an easy feat, but you can rest assured that at least your payment ecosystem is reliable and compliant when working with DirectPayNet.

We specialize in providing subscription merchant accounts to online businesses with PCI-compliant payment gateways and top-tier cybersecurity measures to ensure every transaction is safe, so you can avoid chargebacks and fraud.

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