Amazon Settles FTC Lawsuits for $2.5 Billion Over Prime “Subscription Trap”

Amazon has consented to a $2.5 billion penalty and support for its Prime members to settle the case with the U.S. Federal Trade Commission (FTC).

According to the FTC, approximately $1.5 billion will be allocated to a fund for reimbursing qualifying subscribers, in addition to the billion-dollar civil fine.

The FTC, which oversees consumer protection in the United States, filed a lawsuit against Amazon in 2023 during the Biden administration, accusing the company of enrolling millions of customers in a subscription service without their consent and trapping them in a complicated cancellation process.

The case was heard in a federal court in Seattle earlier this week and is expected to continue for a month.

Andrew N. Ferguson, the Trump-appointed chair of the FTC, celebrated this as “a historic victory for countless Americans who are frustrated with deceptive subscription practices that are nearly impossible to cancel.”


“Evidence indicated that Amazon employed complex subscription tactics aimed at manipulating consumers into signing up for Prime, making it exceedingly difficult for them to cancel their subscriptions,” Ferguson stated. “Today, we are returning billions of dollars to Americans and ensuring that Amazon does not repeat these actions.”

As part of the settlement, Amazon is required to provide a “clear and prominent” option for customers to decline Prime subscriptions while shopping on the site, according to the FTC. The company has previously claimed that it has made improvements to its registration and cancellation processes, describing the FTC’s allegations as outdated.

“We are dedicated to ensuring our customers find it clear and straightforward to sign up or cancel significant memberships while providing valuable services to millions of loyal members globally,” stated the company.

Following the announcement, Amazon’s stock remained relatively stable in New York.

The company faces an additional case initiated by the FTC regarding its alleged maintenance of an illegal monopoly. This case is set to go to trial in 2027 and is presided over by the same judge as the Prime case.

This lawsuit is part of a broader legal action against a major U.S. tech corporation accused of abusing its market position to the detriment of smaller competitors. In subsequent legal maneuvers, Google was designated an illegal monopoly but avoided the government’s most severe penalty.

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Amazon Faces Legal Challenges in the US Over Claims of Subscription Cancellation Difficulties

Amazon faced a US government lawsuit on Monday, where it was accused of employing deceptive methods to enroll millions in its Prime subscription service, making cancellation nearly impossible.

A complaint from the Federal Trade Commission (FTC), filed in June 2023, alleges that Amazon deliberately used a “dark pattern” design to mislead consumers into subscribing to a $139 Prime service during checkout.

According to the complaint, “For years, Amazon has intentionally and subconsciously enrolled millions of consumers in the Amazon Prime service.”

The case pivots on two primary claims: that Amazon registered customers without their clear consent through a confusing checkout process, and that it established a convoluted cancellation system dubbed “Illid.”

Judge John Chun presided over the case in federal court in Seattle. He is also overseeing another FTC case accusing Amazon of operating an illegal monopoly.

This lawsuit is part of a broader initiative, with multiple lawsuits against major tech companies in a bipartisan bid to rein in the influence of US tech giants after years of governmental inaction.

Allegedly, Amazon was aware of the extensive non-consensual Prime registrations but resisted modifications that would lessen these sign-ups due to their adverse effect on company revenue.

The FTC claims that Amazon’s checkout process forced customers to navigate a confusing interface designed with prominent buttons, effectively hiding the option to decline while signing up. Crucial information regarding Prime pricing and automatic updates was often concealed or presented in fine print, forming a core part of Amazon’s business model.

Additionally, the lawsuit scrutinizes Amazon’s cancellation procedure, which the FTC describes as a complicated “maze” involving 4 pages and 6 clicks.

The FTC seeks financial penalties, monetary relief, and permanent injunctions to mandate changes in Amazon’s practices.

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In its defense, Amazon argues that the FTC is overreaching its legal boundaries and asserts that it has made improvements to its registration and cancellation processes, dismissing the allegations as outdated.

The trial is anticipated to last around four weeks, relying heavily on internal Amazon communications and documents, as well as testimonies from company executives and expert witnesses.

Should the FTC prevail, Amazon could face significant financial repercussions and may be required to reform its subscription practices under court supervision.

Source: www.theguardian.com

Gaming Subscription Services Are Overly Complicated

and othersLike many of you, I deeply resent the insidious penetration of subscription services. I started with an affordable, shareable Netflix subscription years ago. Then Spotify, then Disney+ when I had kids, then Prime Video, all of which somehow made sense. Then Fitbit started charging me to unlock features on a device I’d already bought. Google now charges me a monthly fee to store the photos I take with my Google phone in its cloud. I pay a yearly fee for an app that lets me look at guitar tablature. Last week, I tried to buy protein powder only to find I could only buy it if I committed to at least a three-month supply. That’s awful.

When it comes to gaming, I’ve been an Xbox Live subscriber on and off since 2003. PlayStation Plus came later, and Nintendo Online came much later with the launch of the Switch. I don’t play many live service games, but otherwise I would have paid £8.99 for the Battle Pass. To add to this already difficult situation, last week Microsoft announced an update to their video game subscription offers that required a spreadsheet to understand.

Currently, there are two words, Game Pass Standard and Game Pass Core, but they both mean the same thing. There is also Game Pass Ultimate, and some of these options apply to PC as well, while others don’t. Some offer new Microsoft games from day one, some don’t. Some include cloud gaming, some don’t. And they all have higher prices now. I’m not stupid, so even after going through these options multiple times, I can’t 100% explain what they mean and how they differ without referring to a table.




“It’s like an Animal Crossing tax.” Photo: Nintendo

PlayStation Plus is now almost as confusing and expensive. The options are called Plus Premium, Plus Extra (also synonyms), and Plus Essential, and the linguistic clarity is enough to make you want to scream into a pillow. They all come with different perks, but you can’t play online with friends without paying. As for Nintendo Switch Online, well, it has almost no perks, so it feels like a tax on Splatoon 3 or Animal Crossing. But at least it’s simple, with only two options, and significantly cheaper than Xbox or PlayStation.

I hate feeling like I’m paying a small mortgage to every entertainment and services company in existence. You could argue that every company is an option, but it doesn’t feel that way. And outside of gaming, most of these services have proven to capture the market with a relatively cheap introductory price, get everyone to switch, and then raise prices once their competitors fall far enough behind. This is why I’m skeptical of things like Game Pass in general. At the moment you can’t claim it’s a very generous offer with a great games library, but if in 10 years’ time Microsoft has bought up the games industry further and decided to charge you £30 a month to play Call of Duty, you’re going to be in trouble.

I often affectionately tease my partner about his unwavering attachment to physical media. In addition to a record collection that’s thousands of records long and shelves of Blu-rays and DVDs, he also buys boxed games on discs and cartridges like it’s 2005. But his approach is starting to seem like an act of rebellion: At least, despite the decline of video game retail, there’s still the option to actually buy and own games.

He’ll be the only one laughing when, in future, I pay £100 a month for an Ultra Super Game Cloud Box Plus to access and play my digital library of games I bought 10 or 20 years ago.

What to Play




Short, simple and anxiety relieving…Flock. Photo: Annapurna Interactive

Under review Swarm This week’s game is super simple, short and anxiety-relieving. Ride your bird through colorful and bizarre landscapes, identifying and recruiting wildlife. They all look a bit like flying fish, but you’ll know the difference between a piper and a greaves, a bell and a droop, and some animals are hiding. Really It blends in well with the environment and feels like a puzzle game, where you’re figuring out how to find a creature based on a sentence from a field guide.

I wish there was more to the game – the creatures that follow you around don’t do much, for example – but it’s relaxing and stylistically interesting.

Available on: PlayStation 4/5, Xbox, PC
Estimated play time:
5 hours

What to Read




Prince Faisal bin Bandar bin Sultan Al Saud, chairman of the Saudi Esports Federation. Photo: Anadolu/Getty Images
  • I reported last year that the Olympics had tried but failed to include esports. The IOC has now He signed a 12-year contract New event series with Saudi Arabia eSports OlympicsSaudi Arabia is already hosting an esports World Cup, and its Savvy Games Group has made huge investments in various gaming companies, all of which can be seen as an extension of the country’s broader sports-washing efforts.

  • Listen up, all you old-school Roller Coaster Tycoon fans. Frontier has announced Planet Coaster 2A sequel to a highly detailed theme park simulation You will also be able to build a water park..

  • MobileGamer.biz speculates that: Only 2,000 people have paid Resident Evil 7The reported revenue figures suggest this is a technically impressive iOS port, which, if correct, raises the question of whether the market for premium console-style games on smartphones even exists.

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What to click on

Question Block




Nintendo in Tokyo, Japan. Photo: Asker Karimalin/Alamy

The well of questions is drying up, so please send them in. I dug through the email archives for this one. Luke:

“With all of this, with game industry layoffs, the state of console gaming, and late capitalism, where does Nintendo fit in? All this? Big Because 3 is primarily a games company and not a division of a large tech company, they have quietly continued to operate without any major hiring or firings. Is this a by-product of their business culture, or something else?

There are many reasons why Nintendo is particularly resilient: it has large cash reserves, sells consoles at a profit rather than at a loss on hardware to make money on games, and has very high staff retention, allowing for the transfer of organizational knowledge. The company’s much-missed former president, Satoru Iwata, made headlines during the Wii U era when he cut his own salary to protect staff from layoffs. But this is not unusual: Japanese companies generally do not hire and fire employees repeatedly due to employment laws.

This article Gaming Industry Let me explain the labor protections that Japanese developers enjoy. It’s nearly impossible to fire employees unless a company is on the brink of bankruptcy. And this is just one of the many reasons why Japanese companies are not affected by the current flurry of layoffs. Thanks to investment from China and the size and profitability of the mobile games market, the games industry is stable and actually growing in Japan.

If you have any questions for the Question Block or any other comments about the newsletter, Please email us at pushingbuttons@theguardian.com.

Source: www.theguardian.com

It’s Time to Examine the Value Proposition of the Subscription Economy for Customers.

subscription economy It continues to expand unabated.by someone Estimate, companies with subscription licensing have grown three to four times faster than the S&P 500 over the past 12 years. As his CSO at Zoho, a B2B subscription-based technology company founded more than a quarter of a century ago, I see a growing disparity between provider interests and customer outcomes, especially in his SaaS. I realized that.

The prevalence and significant growth of subscription licensing has created an irreproachable model. But if you look closely, software is no longer cheaper, broader, or deeper for customers. Meta, Netflix, Microsoft, Oracle, SAP, Salesforce, and others have recently announced price increases. 24% higher For certain products or services. New layoffs are also underway in the tech industry. Somewhere along the way, economies of scope and scale broke down, and enterprise customers were saddled with monthly, per-user checks.

Rather than contributing to this chasm, software providers can drive growth by passing on the unique benefits of cloud and subscription licensing to their customers. After all, this was the original promise of the model nearly 20 years ago. In my experience, longevity in the market depends on increasing productivity, agility, and revenue for enterprise customers. In other words, adding value rather than limiting it improves both the health and sustainability of the subscription economy and its merchants. Providers can approach this strategy in the following ways:

promote flexibility

Migrating from one tool or system to another is arduous, costly, and disruptive. Even if trial accounts are offered, they have limitations on data processing, storage, usage, and duration, and lack functionality. Increasing the length and scale of customer trials has two benefits for vendors. First, providers can understand the impact of users on enterprise performance, resources, and costs, allowing enterprises to make changes to delivery and pricing without impacting existing paying customers.

Companies can stand out by offering solutions through subscription licensing.

A second benefit of building customer flexibility and choice into your product is new business growth.As a point of Harvard Business Review outside, the Financial Times conducted an experiment in which it removed the ability for customers to view three free articles on the site and instead immediately imposed a paywall. Website traffic fell by 30% and new subscribers declined over time. “If you force every user to convert on the first visit, you’ll lose 79% of conversions, which equates to tens of millions of dollars in customer lifetime value.”

This is because customers prefer to experience the product and build a trusting relationship with the manufacturer before making a purchase decision. In the case of software, deals can run into the millions of dollars, and businesses are willing to shop around until they find the right solution from a trusted vendor at an affordable price. But with the current state of the industry, they may continue to shop forever.

Source: techcrunch.com