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FTC alleges Amazon's ( AMZN ) Prime sign-up practices violated

consumer

protection law

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Amazon denies wrongdoing, claims clear disclosure of Prime

terms

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Trial to include testimony from customers and Amazon

employees

By Dan Catchpole and Jody Godoy

SEATTLE, Washington, Sept 23 (Reuters) - Amazon

duped tens of millions of Prime customers by signing them up

without consent and locking them in with overly complex

cancellation methods, the U.S. Federal Trade Commission will

seek to show at a trial starting in Seattle on Tuesday.

The civil case against the online retail giant and three of its

executives is a key test of the FTC's tough-on-tech stance and

could force Amazon to pay damages worth hundreds of millions of

dollars, plus fines of up to $53,000 per violation. It could

also damage the image of a company that describes itself as

obsessed with making customers' lives easier.

Amazon has denied wrongdoing by the company or its

executives, saying Prime's terms are clearly disclosed and there

are several ways to cancel.

The case is part of a bipartisan crackdown on what the FTC says

are deceptive cancellation practices.

The FTC started probing Amazon's ( AMZN ) subscription practices during

President Donald Trump's first term and the case was filed

during Joe Biden's presidency.

In April, the FTC sued Uber ( UBER ) alleging it deceptively

marketed its Uber One subscription, and sued the operators of

gym chain LA Fitness in August for burdensome membership

cancellation requirements. Those probes began during the Biden

administration.

Prime subscribers pay $14.99 for free expedited shipping, access

to Amazon's ( AMZN ) streaming video service and other benefits.

Amazon recruits new subscribers by offering free trials on

its website using pitches such as: "Get FREE Same-Day Delivery."

But the FTC says Amazon has failed to clearly and conspicuously

disclose to customers that selecting that option will enroll

them in Prime and eventually result in monthly subscription

charges.

While Amazon tested changes that would make those terms clearer

between 2017 and 2022, executives several times rejected them to

prevent sign-ups from declining, the FTC said. The company did

not adopt such changes until 2022, while it was under

investigation by the FTC, the agency said. The agency sued

Amazon the next year.

The FTC says Amazon's ( AMZN ) failure to disclose Prime's terms, along

with multi-screen cancellation processes designed to keep

customers from quitting Prime, violated the Restore Online

Shoppers' Confidence Act (ROSCA).

Amazon signed up 40 million shoppers for Prime without their

consent, an expert witness for the FTC has estimated. And the

company's own data shows that tens of millions of users

abandoned the cancellation process midway through, an FTC

official said.

The company has accused the FTC of trying to stretch the law and

misinterpreting its internal efforts to understand and improve

customers' experience. Additionally, ROSCA "does not require

that a cancellation mechanism be well-promoted or popular," the

company said.

The trial is expected to last about a month and feature

testimony from customers as well as current and former Amazon

employees.

A jury of nine people will decide whether Amazon violated the

law. If the company is found liable, the judge will decide what

penalties to impose and the amount of any damages.

The FTC comes into trial at an advantage, after winning a ruling

that Amazon violated ROSCA when it collected customers' billing

information in the form of saved payment methods before

disclosing Prime's terms and conditions. The judge also ruled

that the three executives are liable for any violations the jury

finds.