Amazon Faces FTC In Trial Over Alleged Prime Enrollment Strategy: Report

Amazon (AMZN) is reportedly facing off against the Federal Trade Commission in a closely watched trial based on allegations that the company misled consumers into enrolling in its Prime membership program.

According to a CNBC report, the trial is being held in a federal court in Seattle. The report added that the trial was expected to last approximately a month and that jury selection began on Monday, with opening arguments slated for Tuesday.

The report added that the FTC filed the lawsuit in June 2023 under the Biden administration, alleging that Amazon misled tens of millions of consumers into enrolling in its Prime subscription and deliberately obstructed their efforts to cancel. The company has denied any wrongdoing.

Retail sentiment around Amazon remained unchanged in the ‘bullish’ territory, with message volumes at ‘high’ levels, according to data from Stocktwits.

CNBC noted that regulators argued that Amazon broke competition and consumer protection laws by allegedly misleading users into signing up for its Prime membership. The report said that the FTC pointed to examples like a button on its site that instructed users to complete their transaction, following which, there was no clarity given on whether the customers were also agreeing to join Prime for a recurring subscription.

“Millions of consumers accidentally enrolled in Prime without knowledge or consent, but Amazon refused to fix this known problem, described internally by employees as an ‘unspoken cancer’ because clarity adjustments would lead to a drop in subscribers,” the agency wrote in a court filing last week, according to CNBC.

Shares of Amazon have gained nearly 4% this year and jumped over 17% in the last 12 months. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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