Many of us have Amazon Prime accounts – we want free shipping. But internal documents and whistleblower accounts show that the the Federal Trade Commission has been investigating Amazon’s deceptive subscription and cancellation practices and that it knew it was deceiving customers into signing up but chose to continue.
Also read:9 Smart Hacks to Save Money on Amazon
The Problems with the Amazon Subscription Model
It’s just too easy to use Amazon Prime – especially during the pandemic. Free two-day delivery is hard to ignore. The $139 annual fee can easily be the shipping fees you’d spend over just a couple of months, depending on your online shopping frequency.
But the company has known as far back as 2017 that its practices in signup and cancellation of Amazon Prime were manipulating its customers. The design of its interface is considered “dark patterns” for intentional deception.
An example is an option at checkout that says: “Get FREE Two-Day Delivery with Prime.” No additional information is given before customers are automatically signed up for a Prime 30-day trial. If the customer doesn’t notice, it converts to a paid subscription.
FTC Investigation Amidst Internal Speculation
The FTC has been following the Prime subscription model Amazon uses. It’s been looking into the possibilities of antitrust and has issued warnings about dark patterns and subscriptions that are difficult to cancel.
The FTC discussed the subscription practices with Amazon, according to anonymous sources. Even as recently as last year, the Prime team met with attorneys regarding the FTC inquiry.
Amazon has considered plans to change the Prime subscription model, but when testing showed lower numbers, the plans were never carried out.
An Amazon spokesperson said its subscription practices are “simple and transparent and clearly present customers with choices and the implications of those choices.”
Amazon Prime Vice President Jamil Ghani said in a statement, “Customer transparency and trust are top priorities for us. By design, we make it clear and simple for customers to both sign up for or cancel their Prime membership. We continually listen to customer feedback and look for ways to improve the customer experience.” That’s probably news to the FTC and the whistleblowers.
More upfront subscription offers and cancellations on Prime and other Amazon subscriptions were considered as recently as this year. One suggested change was no longer shaming users for not subscribing.
While the “Continue with FREE 1-day shipping” and “Get FREE two-day shipping” options were considered by Prime to be too confusing in 2017, one year later, an internal report shows Amazon decided customers “did not understand the impact of their choice.” It concluded, “Prime signups are not always transparent.”
In 2020, an internal report showed Amazon considered replacing the free delivery phrasing with “Start your 30-day free trial.” However, it doesn’t appear to have been replaced yet.
“We have been deliberately confusing,” said one of the six former and current Amazon employees who have come forward. “It’s very un-Amazonian in terms of customer obsession.”
In fact, 2017 data shows that 17,131 of 25,542 cancellation requests were due to “accidental signups.” That’s 67 percent. While some execs seemed to be concerned with this, the head of Prime at that time wondered if it was the color of the signup button that was the issue rather than the language.
The FTC questioned whether Amazon was deceiving users with Prime signups and whether top execs were involved.
Prime Subscription Offers Still Confusing
Despite the FTC investigating and Amazon considering changes to the Prime subscription model, not much has changed. The FTC chairperson tweeted in January, “FTC has made clear that to comply with law, businesses must ensure signups are clear, consensual, and easy to cancel.
A few months earlier, the FTC issued guidance to companies about “illegal dark patterns” and noted it had an increase in “the financial harms caused by deceptive signup tactics, but failed to mention specific companies.
If all of this is making you want to cancel Prime, know that Amazon has also come under fire for its cancellation practices. The “Iliad” project put users through multiple questions and offers before they could successfully cancel. When Iliad was launched in 2017, cancellations dropped by 14 percent. Iliad reportedly still lives on to this day, despite multiple studies and projects to replace/change it.
There has been one suggested change carried out: an end to shaming customers who don’t sign up. Instead of “No Thanks, I don’t want FREE Two-Day Shipping,” users may now simply click “No Thanks.”
But if you aren’t already a subscriber and would simply like to know more about Amazon Prime, check out this guide.
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