FTC Calls Out 3 Amazon Executives in Amended Complaint Over Prime Enrollments
The FTC added three Amazon executives and included “significant new details” in an amended complaint Wednesday (docket 2:23-cv-00932) in U.S. District Court for Western Washington in Seattle. The details were redacted in its original June complaint.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The lawsuit alleges Amazon for years has tried to enroll consumers into its Prime program without their consent "while knowingly making it difficult" for them to cancel their Prime subscriptions. The agency announced the amended complaint in a news release Wednesday.
Newly named in the amended complaint are Neil Lindsay, who served as senior vice president overseeing Prime and now serves on the company’s overall leadership team; Russell Grandinetti, a senior vice president overseeing Prime; and Jamil Ghani, a vice president overseeing Prime subscriptions, the FTC said.
Among new details involving Amazon’s alleged misconduct are emails and messages showing Lindsay, Grandinetti and Ghani were “fully aware of the issues” surrounding consumers being subscribed to Prime without their consent and then facing “significant hurdles when trying to cancel.” Other Amazon employees informed the three in emails, meetings and presentations about the issues and encouraged them to make changes to stop Amazon from “tricking its customers,” said the amended complaint, “but the executives chose not to act.”
Instead, executives “slowed, avoided, and even reversed user experience changes” that they knew would cut down on “nonconsensual enrollment” because making those changes “would also negatively affect Amazon’s bottom line,” the FTC said. It cited an internal draft memo stating that Amazon decided that “clarifying” the enrollment process was not the “right approach” because it would cause a “shock” to business performance.
The e-commerce leader created a “labyrinthine cancellation process” for Prime that the company internally called “Iliad” after Homer’s Trojan War epic poem, the FTC said. The company, “under pressure from the FTC,” made some changes to its processes before the initial complaint was filed in June, but the “Iliad cancellation flow was in place for years,” said the agency. A company policy required customer service employees to direct consumers who called to cancel Prime to the Iliad flow online, even though customer service agents had the ability to process cancellations, it said.
The unredacted complaint’s allegations included excerpts from an Amazon document showing the company uses the term “misdirection” to refer to its practice of “forcing consumers to find a small blue text link” in order to make a purchase without joining Prime. A “far more prominent” button saying “Get FREE Two-Day Shipping” enrolls consumers in Prime, it said. The issue of accidental Prime signups is “well documented,” said a referenced company newsletter that acknowledged Prime customers sign up accidentally or don’t see auto-renewal terms, it said.
Other newly unredacted information includes details about Amazon’s attempts to “delay and hinder” the FTC’s investigation, including attempting to apply “legal privilege to documents that were not privileged” and to conceal the existence of other “damaging documents," the agency said. The action alleges violations of the FTC Act and the Restore Online Shoppers’ Confidence Act. The agency seeks an order for permanent injunctive relief, restitution and civil penalties, it said.