FTC, Amazon Trade Blows Over Attempts To End Prime Case

Law360  — The Federal Trade Commission and Amazon have slammed one another in federal court filings over their competing bids to win regulators’ case targeting Prime subscription enrollment practices, continuing to spar over the applicability of a consumer protection law shielding online shoppers.

The FTC and Amazon.com Inc. each urged a federal judge in Washington state Tuesday to deny the other’s summary judgment bid. The commission pointed to “overwhelming, undisputed evidence” that Amazon’s Prime subscriber registration tactics violated the Restore Online Shoppers’ Confidence Act.

Refuting the company’s contention that the law doesn’t apply, the commission also criticized Amazon for attempting to curtail its case, which it brought in June 2023 then amended later that year to include claims against several executives of the e-commerce giant.

“Likely recognizing their inability to escape findings of liability, defendants resort to trying to chip away at the FTC’s case by attacking the FTC’s civil penalty claims or attempting to limit the time period over which the FTC can obtain compensatory monetary relief,” the commission said in its filing opposing the company’s motion. “Even those more limited strategies, however, crumble in the face of the overwhelming evidence against defendants.”

The FTC maintained that Amazon illegally duped consumers into recurring subscriptions without their consent using manipulative and deceptive user interface designs known as dark patterns. Its ROSCA claims are based on the allegation that Amazon regularly interprets subscribers’ failure to cancel as an acceptance of renewal — the type of “negative option feature” prohibited by the law — the commission contended.

“With the litigation walls closing in, defendants now argue, for the first time, that Prime is not governed by ROSCA at all because Prime is not sold through a ‘negative option feature,'” according to the commission’s filing. “Defendants’ argument is contrary to ROSCA’s plain text, structure, and legislative history.”

Amazon countered in its filing that the FTC cannot show ROSCA applies because all its Prime enrollment paths require consumers to take an affirmative step by clicking a sign-up button.

“Those flows encompass the one and only ‘offer’ Amazon makes to ‘provide’ Prime ‘services,’ so any subsequent silence or inaction (such as at the time of a monthly payment) is irrelevant as a matter of law,” the company said.

It also told the court that discovery has revealed that what the FTC has called dark patterns are actually common practices and designs in e-commerce, such as soliciting enrollments during the checkout process. Prime’s terms are clearly disclosed — even if the commission alleges some consumers may not “notice” them — and the cancellation process is simple, Amazon argued.

“The Federal Trade Commission’s accusations against Amazon Prime fell apart during discovery,” according to the company’s filing. “Ignoring the undisputed evidence in Amazon’s favor, the FTC seeks to parlay its narrow win on Amazon’s motion to dismiss into summary judgment of liability. But the evidence is against the FTC at every turn.”

U.S. District Judge John H. Chun refused to toss the case in May 2024, finding the commission had adequately alleged Amazon failed to properly disclose that a free trial of Prime automatically converted into a paid subscription. He also pointed to allegations of consumer confusion about whether they were even enrolling in the service.

During discovery, the judge denied requests from Amazon for commission documents about the scope of ROSCA. He also rejected a bid from the FTC in May seeking documents from the executives about their assets and liabilities to help determine what civil penalties will be sought.

In a sanctions motion filed last month, the FTC accused Amazon of withholding tens of thousands of documents by misclassifying them as privileged, including a document that it said called former Amazon CEO Jeff Bezos as the company’s “chief dark arts officer.”

In its response, Amazon argued the sanctions were not warranted because the company has agreed to the FTC’s requested relief, including discovery extension and coverage of the related costs. The retailer labeled the sanctions motion as an attempt by the commission to draw public attention and distract from the core issues of the case with inflammatory language.

A representative of the FTC declined to comment Wednesday.

A spokesperson for Amazon did not immediately respond to a request for comment.

The FTC is represented in-house by Jonathan Cohen, Evan Mendelson, Jonathan W. Ware, Sana Chaudhry, Anthony Saunders, Olivia Jerjian, Colin D. A. MacDonald, Rachel F. Sifuentes and Jeffrey Tang.

Amazon and the executives are represented by Kenneth E. Payson and James Howard of Davis Wright Tremaine LLP, John C. Hueston, Moez M. Kaba and Joseph A. Reiter of Hueston Hennigan LLP, and Stephen P. Anthony, Laura Flahive Wu, Laura M. Kim, John D. Graubert, John E. Hall, Megan L. Rodgers and Anders Linderot of Covington & Burling LLP.

The case is Federal Trade Commission v. Amazon.com Inc. et al., case number 2:23-cv-00932, in the U.S. District Court for the Western District of Washington.

–Additional reporting by Matthew Perlman and Bryan Koenig. Editing by Covey Son.

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