FTC Names Three Amazon Executives in Lawsuit Over Its Prime Program

From a Wall Street Journal story by Dana Mattioli headlined “FTC Names Three Amazon Executives in Suit Over Prime”:

The Federal Trade Commission disclosed new details in its lawsuit against Amazon.com to publicly name three executives who the agency says played a key role in a scheme to enroll customers unwittingly in the company’s Prime program and make it difficult for them to cancel their subscription.

On Wednesday, the agency amended a lawsuit it filed in June, with additional details of Amazon’s efforts to sign up and keep Prime customers. The agency also unredacted parts of its initial complaint.

The agency says that Neil Lindsay, who served as a senior vice president overseeing Prime during the period, Russell Grandinetti, the company’s senior vice president of international consumer and Jamil Ghani, a company vice president who oversees the Prime subscription program, were aware of the company’s misconduct and chose not to act. Lindsay and Grandinetti are both part of Amazon’s S-team, a group of the most senior leaders at the company under Amazon CEO Andy Jassy.

The FTC alleges that Amazon had a purposefully complicated cancellation system for Prime members that internally was code-named “Iliad” after the ancient Greek work by Homer. The epic poem is notoriously hard to read.

“The FTC’s decision to add three Amazon leaders to its civil case against the company is unwarranted under the facts and the law,” said an Amazon spokesman. “To claim that their efforts were made in anything but the utmost good faith is unfounded and represents a radical departure from the FTC’s own standards for such claims.”

“We’ve always made it clear and simple for customers to sign up for and cancel Prime, and we look forward to demonstrating that the FTC’s claims to the contrary are wrong” the spokesman said.

Newly unredacted parts of the complaint show Amazon executives dismissing concerns about Prime customers accidentally enrolling. “In a meeting with Amazon designers, Defendant Lindsay was asked about Amazon’s use of dark patterns during the Prime enrollment process,” the new materials say. “Lindsay explained that once consumers become Prime members—even unknowingly—they will see what a great program it is and remain members, so Amazon is ‘okay’ with the situation.”

In another section, “Lindsay suggested something he called ‘scary’—that Amazon should consider making it as easy to decline Prime as to enroll,” the unredacted materials say.

In some of the unredacted sections, Amazon employees make the argument to senior management that the company should be more transparent about its enrollment process. An email to Ghani in 2020 reads: “An unknown $12.99 charge could mean grocery money for a family, gas to fill up a car, or just the last bit of money to make rent…Do we think that they should also [have] to call customer service to ask for a refund, when they discover this unknown charge [for Prime]?”

An email from Lindsay to Ghani acknowledges the intensifying regulatory pressure on the company for the behavior: “I may land in the same place, but given how hot this topic is in the press lately, and the risk of regulatory action in some countries, I [am] [sic] wondering how you might thread the needle…between making it easy to join, easy not to mistakenly join and not unduly difficult to unsubscribe[.]”

Amazon’s Prime membership program provides free shipping and other perks such as video streaming to customers who pay for an annual subscription, and is wildly popular with customers. Prime has more than 200 million members worldwide, and has helped make Amazon a part of customers’ daily shopping habits.

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in the agency’s June press release.

The updated lawsuit comes as the agency prepares to file a monopoly lawsuit against Amazon that targets a range of Amazon’s business practices that the FTC finds anticompetitive. The lawsuit will target a number of Amazon’s businesses, such as its Fulfillment by Amazon logistics program and pricing on Amazon.com by third-party sellers, The Wall Street Journal has reported. The lawsuit will suggest that Amazon make “structural remedies” that could lead to a break up of the company.

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