Washington: In a significant legal setback for U.S. e-commerce giant Amazon, a federal judge has ruled that the company violated consumer protection laws by collecting billing information from Prime subscribers before fully disclosing the service’s terms. The ruling provides the U.S. Federal Trade Commission (FTC) a partial victory as it prepares for the upcoming trial on allegations of deceptive subscription practices.
U.S. District Judge John Chun determined that Amazon’s practices surrounding its Prime service could mislead customers, noting that tens of millions of subscribers may have been enrolled without proper consent. The FTC contends that Amazon also made cancellation processes unnecessarily complex, effectively preventing users from easily opting out a move the agency claims breaches the Restore Online Shoppers Confidence Act (ROSCA).
“Today’s decision affirms that Amazon defrauded American consumers by failing to disclose all terms of Prime before collecting payment information,” said Chris Mufarrige, head of the FTC’s Bureau of Consumer Protection. The agency emphasized that its goal is to ensure affected subscribers are made whole.
Judge Chun’s ruling also clarified that two Amazon executives could be held personally liable if the FTC proves violations during the trial. Additionally, Amazon is now barred from arguing that ROSCA does not apply to its Prime sign-ups, placing the company at a disadvantage before the trial begins.
Amazon has denied the allegations, and a company spokesperson did not immediately respond to requests for comment. The ruling could have far-reaching implications for Amazon’s subscription model and broader e-commerce practices, signaling increased scrutiny from regulators on transparency and consumer consent in digital services.
The trial is expected to proceed in the coming months, with industry observers closely watching for its impact on subscription services across the United States.