U.S. Federal Trade Commission Settles With Amazon Just Two Days Into Trial ⇥ ftc.gov

In 2023 Lina Khan, then-chair of the U.S. Federal Trade Commission, sued Amazon over using (PDF) “manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions” and “knowingly complicat[ing] the cancellation process”. Some people thought this case was a long-shot, or attempted to use Khan’s scholarship against her.

Earlier this week, the trial began to adjudicate the government’s claims which, in addition to accusing Amazon itself, also involved charges against company executives. It was looking promising for the FTC.

Annie Palmer, CNBC:

The FTC notched an early win in the case last week when U.S. District Court Judge John Chun ruled Amazon and two senior executives violated the Restore Online Shoppers’ Confidence Act by gathering Prime members’ billing information before disclosing the terms of the service.

Chun also said that the two senior Amazon executives would be individually liable if a jury sides with the FTC due to the level of oversight they maintained over the Prime enrollment and cancellation process.

Then, just two days into the trial, the FTC announced it had reached a settlement:

The Federal Trade Commission has secured a historic order with Amazon.com, Inc., as well as Senior Vice President Neil Lindsay and Vice President Jamil Ghani, settling allegations that Amazon enrolled millions of consumers in Prime subscriptions without their consent, and knowingly made it difficult for consumers to cancel. Amazon will be required to pay a $1 billion civil penalty, provide $1.5 billion in refunds back to consumers harmed by their deceptive Prime enrollment practices, and cease unlawful enrollment and cancellation practices for Prime.

As usual for settlements like these, Amazon will admit no wrongdoing. The executives will not face liability, something Adam Kovacevich, head of the Chamber of Progress, a tech industry lobbying group, said today was a “wild … theory” driven by “Khan’s ego”. Nonsense. The judge in the case, after saying Amazon broke the law, gave credence to the concept these executives were personally liable for the harm they were alleged to have caused.

Former FTC commissioner Alvaro Bedoya on X:

Based on my initial read, do the executives need to do anything separate from that? Do they pay any fines? Are they being demoted? Are they subject to extra monitoring? Do they need to admit any guilt whatsoever? The answers, as far as I can tell are no, no, no, no, and no. What’s worse, the order applies to the executives for only three years — seven years less than the company.

Two-and-a-half billion is a lot of dollars in the abstract. CIRP estimates there are 197 million U.S. subscribers to Amazon Prime, which costs anywhere from $7 to $15 per month. For the sake of argument, assume everyone is — on average — on the annual plan of $11.58 per month. It will take barely more than one billing cycle for Amazon to recoup that FTC settlement. The executives previously charged will bear little responsibility for this outcome.

Those million-dollar inauguration “investments”, as CBS News put it, sure are paying off.