A U.S. federal court has ruled that Amazon violated online consumer protection laws by enrolling users in its “Prime” service before fully disclosing all program terms. This ruling represents a partial victory for the Federal Trade Commission (FTC), which has accused the company of misleading practices.
Judge John Chun of the federal court in Seattle found that Amazon breached the Restore Online Shoppers’ Confidence Act (ROSCA), a U.S. law established to regulate digital subscriptions and protect consumers from deceptive practices. The judge also indicated that two of the company’s top executives could face personal liability if the FTC proves its allegations in a subsequent trial.
The FTC claims that Amazon registered tens of millions of users without their clear consent, collecting their financial data before presenting the full terms of the “Prime” service. The company is also accused of deliberately complicating the cancellation process, which prevented or delayed users from terminating their subscriptions.
Chris Maffei, director of the FTC’s Office of Consumer Protection, stated, “This ruling confirms that Amazon misled American consumers by concealing the terms of the Prime service before collecting their payment information.”
In response, Amazon denies all fraud allegations, asserting in a statement that “neither Amazon nor its officials acted unlawfully,” expressing confidence that the facts will prove their good intentions. The company emphasized that “Prime” is immensely popular and is voluntarily chosen by millions of users worldwide.
This case is part of a broader series of confrontations between the FTC and major digital platforms. For the FTC, this case serves as a significant reminder to large tech companies that rules regarding transparency and prior consent are not optional.
This partial ruling is a setback for Amazon ahead of the final trial, as it prevents the company from contesting the application of the ROSCA on its practices. The outcome may result in substantial financial penalties for the company, potentially forcing it to modify its subscription and cancellation procedures.
