FTC targets Amazon Prime enrollment practices as Seattle trial opens

SEATTLE — A federal trial in Amazon’s hometown is opening this week to decide whether the online retailer tricked customers into signing up for Prime and then made it hard to leave. The Federal Trade Commission filed suit in U.S. District Court in Seattle two years ago, alleging more than a decade of violations including those tied to the Restore Online Shoppers’ Confidence Act. Jury selection began Monday, with opening statements to follow. Prime is a paid membership offering perks such as faster shipping, access to streaming video, and discounts at Whole Foods, for an annual fee of 139 dollars or 14.99 dollars a month. The program has grown substantially, with more than 200 million members, and Amazon has emphasized its role in the company’s strategy to lock in customers through recurring revenue streams. In its most recent quarterly report, the company said subscription services generated more than 12 billion dollars in net revenue, a 12% year-over-year increase that encompasses Prime-related charges as well as other services like music and e-books.

The company says it clearly explains Prime’s terms before charging customers and offers easy ways to cancel, including by phone, online, or through online chat. A trial brief filed by Amazon contends that occasional customer frustrations are inevitable for a popular program and that the presence of a small number of misunderstandings does not prove a legal violation. Still, the FTC contends that Amazon deliberately designed its enrollment process to encourage Prime signups and to obscure when a sale included Prime benefits. The agency said that in some cases, customers completed transactions via a button that did not clearly state Prime would be added, and that such disclosures were insufficient to meet legal requirements. The FTC argues that millions of consumers were enrolled in Prime without knowledge or consent, and that Amazon resisted changes that could have made enrollment and cancellation simpler, describing internally a problem labeled as an “unspoken cancer” because addressing it might lead to subscriber losses. The internal metric referenced the ongoing tension between maintaining Prime subscriptions and providing customers with clear, straightforward choices.

U.S. District Judge John Chun has already ruled that the ROSCA applies to Prime, and he limited some of the defenses Amazon can raise at trial while allowing others to go forward. He also found that Amazon violated the statute by collecting customers’ billing information before disclosing Prime’s terms. But Chun left several pivotal issues for the jury to decide, including whether Prime’s disclosures of its material terms were clear and conspicuous and whether the so-called Illiad cancellation method is, in fact, a simple option under the law. In a separate step that could affect liability for specific individuals, the judge determined that two Amazon executives named as individual defendants—Neil Lindsay and Jamil Ghani—were so entwined with the Prime program that they could face personal liability if the jury sides with the FTC. A third executive, Russell Grandinetti, could also be exposed to personal liability under certain circumstances.

Amazon issued a brief statement in response to the courtroom posture: neither the company nor the named executives did anything wrong, and the facts, they said, will show that the executives acted properly and that customer interests come first. The FTC declined to comment.

The FTC’s involvement traces back to 2021, during the early days of the Biden administration, when the agency began examining Prime subscription practices. The formal lawsuit followed in 2023, placing the agency’s broader antitrust agenda against Amazon in sharp relief just as the sector faced heightened scrutiny over how platform companies shape consumer choices. The case sits alongside an ongoing FTC antitrust lawsuit accusing Amazon of monopolistic control over online marketplaces, underscoring the department’s willingness to pursue more aggressive enforcement in the tech space.

Earlier this year, the judge admonished Amazon for withholding tens of thousands of documents from the FTC, including documents marked as internal legal advice, describing the conduct as tantamount to bad faith. The dispute over document production highlights the high-stakes nature of the case and the tensions between a company offering a widely used consumer service and a federal regulator seeking to curb what it views as deceptive practices. While the trial focuses on Prime, the proceedings touch on broader questions about how online subscription programs are marketed and how clearly they must disclose terms and costs to consumers.

For Amazon, Prime remains a cornerstone of a business strategy that increasingly relies on recurring revenue and a broad ecosystem of services, from shopping to streaming and digital content. The company has repeatedly framed Prime as a value proposition that customers can understand and easily opt out of if they choose to do so. The FTC’s portrait, by contrast, portrays Prime as a carefully engineered mechanism designed to capture customers into a service they may not realize they were joining, with a process that sometimes obscured the connection between a purchase and Prime enrollment.

As the trial unfolds in Seattle, observers will watch how the jury weighs the friction of canceling and the clarity of Prime’s terms against the company’s insistence that its disclosures meet legal requirements and that the cancellation path remains straightforward for most users. The outcome could have implications for how online subscription programs are marketed and managed in the rapidly evolving landscape of digital commerce, where a growing portion of revenue depends on ongoing memberships rather than one-time purchases.