Last week, the U.S. Federal Trade Commission filed suit against Amazon, alleging design patterns which made it easy to accidentally register for Amazon Prime, and difficult to cancel once enrolled. The lawsuit (PDF) is liberally redacted; what is visible attempts to paint a picture of a business which induces people into a monthly subscription. It is the latest example of Lina Kahn’s vigorous scrutiny of massive businesses, and its recent focus on so-called “dark patterns”, also known as “deceptive design”.
These practices are not new — the FTC writes of “unscrupulous direct-mail and brick-and-mortar retailers” which engage in behaviour which is basically a scam — and U.S. regulators have a history of investigating such businesses. The sweepstakes company Publishers Clearing House is one such example which, in 1994, settled with 14 Attorneys General over its use of deceptive language. The company allegedly gave the impression that entering the contest by returning a postcard with a magazine subscription purchase would increase the odds of winning compared to simply returning the postcard, and using language like “finalist” which implied greater urgency. It did not admit wrongdoing in its settlement, but agreed to change its practices.
Times change and Publishers Clearing House no longer uses such suggestive language in postcards. Instead, as described in an $18 million FTC settlement today, it used deceptive language and dark patterns on its website and through email messages. It gave the impression to customers that a purchase would increase their chances of winning a sweepstakes prize, and used phrases in email messages to make them sound like government documents. Protecting people from deceptive and unfair business practices like these is part of the FTC’s mandate, is a phrase I typed before looking it up and finding that is exactly how the FTC defines its mission. How embarrassing!
Anyway, the FTC’s complaint against Amazon has business-minded voices like Ben Thompson stepping in to defend the company. Thompson admits the FTC may have a point when it comes to Amazon’s purchase flow, pointing to several screenshots posted on Hacker News:
Are these UI decisions that are designed to make subscribing to Prime very easy? Yes, and that is a generous way to put it, to say the least! At the same time, you can be less than generous in your critique, as well. […]
Why should anyone be more sympathetic to Amazon’s perspective? This is the purchase flow for one of the world’s biggest online retailers; it is safe to say every decision here is deliberate and has been vetted by many people. The kindest assumption one can make is that Amazon intended to walk right up to the line of illegally deceiving people while trying not to cross it.
[…] The last image, for example, complains that Amazon is lying because the customer already qualifies for free shipping, while ignoring that the free shipping on offer from Prime arrives three days earlier! That seems like a meaningful distinction.
Thompson is referencing this screenshot, which shows an Amazon checkout page with a $5.99 shipping option preselected, even though a free shipping option is available. A second free shipping option is also presented, the selection of which would subscribe the user to Amazon Prime. The complaint of the user who posted the image is that Amazon has preselected a paid shipping option when a free option is available, knowing that it would take longer for the item to arrive than either the preselected paid shipping option or the fastest Prime choice, and that Amazon presents a Prime subscription as a way to “save $5.99 on eligible items in this order”. A more honest screen would preselect free shipping and explain how subscribing to Prime would arrive sooner.
Nevertheless, this section of Thompson’s piece is the closest he comes to a concession that Amazon’s practices might be shady. There is plenty of real-world evidence to support this position. A March survey by Which? found that one in eight Brits registered unintentionally. They were disproportionately older and poorer. Reporting by Eugene Kim at Insider indicates Amazon has flagged accidental Prime registrations that “erode customer trust” since 2017.
This is why I do not think we need to be more sympathetic to Amazon or blunt criticisms. It is one of the biggest online retailers in the world, and its Prime membership program is a recurring revenue machine. Every decision it makes about registering for that program or buying products on its site is analyzed to death.
Thompson is only warming up. People who use Amazon without paying for Prime are free-riders, economically speaking, because they get some of the efficiencies of the company’s reorganization of its supply chain around a goal of offering same-day delivery:
In this view, Amazon “free-riders” get Prime benefits without paying for Prime; they earn this benefit by successfully navigating Amazon’s dark patterns, which, to be sure, are its own cost. I would also note that Amazon does benefit from free-riders: at the end of the day the most important driver of the company’s profitability is how much leverage it can gain on its massive costs; I would bet that from Amazon’s perspective a “free-rider” who buys things on Amazon is a net positive…as long as there aren’t too many of them.
This is an insane way to justify tricking some people into signing up for a monthly subscription. I do not think this is emphasized nearly enough in Thompson’s article: a Prime subscription is not some irritating email list people are not aware they are signing up for; it costs $15 per month. That may not be a lot to some people but, for others, it can make a difference in a monthly budget. A deliberately deceptive checkout process should not be a puzzle users are expected to solve lest they find themselves sending money every month to a business they might use only rarely.
I have told this story before but it is relevant here: many years ago, I was trying to purchase some clothes at Hudson’s Bay, and the salesperson asked me repeatedly to register for what they called a rewards and discount membership card. I asked if it was a credit card, and they said it was not. Since they had asked so many times and I just wanted to go home, I agreed, only to realize after I had paid that it was a credit card after all. I closed it immediately and returned the clothes.
This being a brick-and-mortar store, it was a particularly aggressive salesperson who was to blame, probably because they were trying to hit a goal set by highers-up. Their behaviour could be changed at a store level — it was one of the few times in my life when I have complained to management. Amazon created and launched in many regions a singular complicated checkout process that attempts to get you to spend $15 per month.
The allegedly deceptive Prime registration process is one thing the FTC has an issue with; it also does not like the Prime cancellation procedure. It says it is too easy to unintentionally create a $15 per month charge on your credit card, and too hard to cancel your membership.
On this, I find the FTC’s case less persuasive, but not insignificant. It is certainly not the worst cancellation process. However, it is worth pointing out the project which created this multistep process was internally referred to as “Iliad”, suggesting its arduous qualities were very much the point. If the data from the survey conducted by Which? is generally fair — that is, those who registered for Prime unintentionally are disproportionately older and less familiar with Amazon as a whole — it seems to me this unnecessarily cumbersome cancellation process would be perceived as even more challenging, though I am wary of reading too much into that survey. Also, it is the one thing Amazon preemptively changed as the FTC was investigating the company, according to the Commission’s suit, so it seems Amazon thought its complaints had at least a little merit.
These are the kinds of issues where we cannot trust the market to regulate itself. Unintentional registrations were a known issue at Amazon, but Kim’s reporting for Insider indicates the fundamental problems were not taken seriously. A difficult cancellation process is similarly not self-regulating. Consumer Intelligence Research Partners, an analyst firm, estimates well over 90% of Prime members remain subscribers. That is probably because most of them like it — CIRP also estimates that one-quarter of Prime members who pay monthly stop and restart their membership. But some of that stickiness over some period of time — likely months rather than years — might be because some users are confused by how to cancel, or they did not know they opted into a free thirty-day trial which automatically converted into a paid membership. Knowing that with a high degree of certainty is very difficult.
But making things better is a good course of action, doable, and maybe even easy. The FTC’s allegations echo 2021 complaints from the Norwegian Consumer Council. Last year, Amazon said it would change its cancellation process in Europe to one which takes just two steps and is clearly labelled. It is fair to argue that its current U.S. process is not that difficult, but it is obviously inferior to the E.U. version. Thompson protests the involvement of “government regulators getting involved in product design on a philosophical level”, but it was that kind of pressure which produced changes in both the U.S. and the E.U. resulting in better designed products for users.
Thompson:
What this means is that, to the extent the FTC is effective is the extent to which Amazon almost certainly makes delivery worse for non-Prime members (i.e. differentiates based on service level instead of dark pattern navigation capability) and/or simply makes Amazon.com Prime only, restricting availability to the people who the FTC insists ought not pay for faster delivery. It’s not clear to me how much of a win this is.
[…]
[…] the fundamental point is that the removal of friction leads to a different set of trade-offs. In the case of targeting and tracking, the payoff is a massive increase in consumer welfare by virtue of access to all of the world’s information (Google), and all of the world’s people (Meta); in the case of things like dark patterns and personal appeals, the payoff is ordering sunglasses for your upcoming fishing trip at 10am and having them in hand at 4pm, or, more broadly, to have access to anything you need no matter where you live.
I held on tight and kept my arms and legs inside the ride at all times, but this is where things took a turn. Thompson here is defending the use of checkout and cancellation flows designed to trick people which are apparently necessary in order to make same-day shipping possible.
I do not wish to downplay how great Amazon and other retailers can be. Easy online shopping and rapid delivery are a convenience for many, but can be life-changing for people with disabilities. Even in Thompson’s example, the ability to get a hard-to-find product delivered in a rush clearly made a difference in his life.
But if the checkout form is redesigned to reduce unintentional Prime sign-ups and cancellations become easier, is Amazon’s entire infrastructure going to become meaningfully worse? If the way Amazon runs its online marketplace can only be maintained by coercing users into registering for Prime and making it hard for them to stop paying — and dangerous and low-paid labour — that seems like a profound argument against the way Amazon works today, not in favour of it. It indicates a company which is deceptive to its core. Amazon needs to do better.