On June 21, 2023, the FTC filed a complaint in federal district court against Amazon for allegedly using manipulative design choices (“dark patterns”) to enroll customers into Amazon Prime subscriptions and to make it difficult for consumers to cancel those subscriptions. This is a landmark auto-renewal enforcement action. Although much of the complaint is redacted, the public portions demonstrate that the FTC is focused on curbing alleged dark patterns, as the agency has signaled previously, and intent on reshaping the subscriptions industry. We expect to see additional auto-renewal enforcements (from the FTC, state regulators, and the plaintiff’s bar) in the second half of 2023. Beyond enforcement, the FTC has also proposed amendments to its Negative Option Rule (see our blog post here), which, if enacted as proposed, would significantly transform the obligations for autorenewing services.
To minimize risk of a similar enforcement action, businesses should carefully review their enrollment flows, cancellation flows, and other user interfaces with an eye towards the practices identified in the complaint, which the FTC alleges 1) trick consumers into purchasing subscriptions they do not want, 2) obscure key subscription terms, 3) make it overly difficult to cancel, and 4) otherwise mislead and confuse consumers.
Enrollment Flows
The Commission claims that Amazon uses dark patterns to trick unwitting consumers into signing up for Amazon Prime, both when purchasing products on Amazon’s marketplace and when enrolling in Amazon’s Prime Video streaming service. Our key takeaways are:
- Exercise caution when upselling subscriptions. The FTC’s concerns regarding subscription enrollment flows are heightened where a consumer initiates a separate transaction (in this case, purchasing a standalone item from Amazon) and has an unavoidable subscription offer thrust upon them.
- Confirm that the subscription purchase page contains all legally required disclosures. The complaint contends that the relevant screens did not disclose that the Prime subscription auto-renewed unless cancelled (despite describing the price as “$14.99/month”). Additionally, that same screen included a block of disclosures at the bottom, but consumers could enroll in Prime without scrolling to that portion of the screen.
- Consider how you design the “purchase” or “enroll” choice mechanisms relative to the appearance of other options and the surrounding design. Be particularly conscious of the placement of choices and design elements that make choices asymmetric or privilege certain specific information relative to other information.
- Consider the unique challenges with mobile purchase flows, including whether users have to scroll.
- Evaluate the consumer’s understanding of what they are buying. The FTC alleges that Amazon used confusing wording, button colors, and default choices to push consumers towards a more expensive Prime bundle subscription rather than a lower-cost Prime Video subscription on the Prime Video page.
- Avoid “confirmshaming.” The FTC alleges that Amazon uses emotive wording around a disfavored option to guilt users into selecting the favored option.
Cancellation Flows
The complaint similarly claims that Amazon used dark patterns to make it difficult for consumers to cancel their Amazon Prime subscriptions. Here are the key takeaways from the cancellation portion of the complaint:
- Consider the number of pages, clicks, and options presented. Assess how many options are built into each page of the cancellation flow with an eye towards the option that would lead the consumer out of the cancellation flow and the repetition of options that the consumer has already bypassed earlier in the flow.
- Evaluate how easy it is for consumers to locate the cancellation flow. Before digging into the cancellation flow itself, the complaint alleges that Amazon made it difficult to even find that flow despite recognizing that consumers could locate the flow through Amazon’s search functionality and customer service.
- Select the names of buttons wisely. If a button will not instantly cancel the service, but instead will take the consumer to the next step of the cancellation process, avoid button names that may imply the opposite (e.g., “End Membership” or “Cancel Membership”).
- Be mindful of the win-back offers and messaging incorporated into the cancellation flow. The FTC alleges that Amazon did not design the flow to be simple or easy, but rather focused on informing subscribers of benefits they would lose, marketing, and alternative payment structures available to them. This demonstrates that even without strict restrictions on the presentation of “Saves” (which would be highly regulated under the FTC’s proposed revisions to the Negative Option Rule), the FTC views such approaches with skepticism.
- Consider the appearance, placement, and emotional impact of the various options. Scrutinize the placement of choices (e.g., whether the option to continue or finalize the cancellation is buried under other choices) and try to avoid asymmetric choices that arguably make it easier to abandon the cancellation process than complete it.
- Assess whether consumers can cancel via all technologies that they can use to enroll. The FTC points out that consumers could enroll in subscriptions through Amazon FireStick and Fire TV, but could not cancel via those same technologies. Instead, they had to contact customer service or use the desktop or mobile flow.
