Retail news that keeps industry pros in the know
Retail Brew delivers the latest retail industry news and insights surrounding marketing, DTC, and e-commerce to keep leaders and decision-makers up to date.
Suffice it to say, Amazon CEO Andy Jassy is straight up not having a good time right now.
Last week, the Federal Trade Commission filed a lawsuit against Amazon, alleging the company manipulated its customers into signing up for Prime and purposely made it more difficult to cancel the subscription service.
The suit alleges Amazon implemented deceptive design tactics called “dark patterns” that duped users into signing up for Prime, made it more difficult for customers who didn’t have the service to make purchases, and purposely complicated the cancellation process.
“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” FTC Chair Lina Khan said in a statement to the New York Times.
Amazon denied the allegations in a statement that appears in the New York Times and other outlets (and that was emailed to us). “The FTC’s claims are false on the facts and the law…we make it clear and simple for customers to both sign up for or cancel their Prime membership,” it claimed.
The FTC lawsuit is the latest in a bevy of legal and regulatory battles Amazon has faced. The Everything Store is also facing labor and cost difficulties, as Jassy highlighted in a letter to shareholders in April.
- Last month, Amazon agreed to pay $30+ million to settle two FTC lawsuits involving privacy violations related to its Alexa virtual assistant and Ring home devices.
- Earlier this week, Sen. Bernie Sanders (I-Vt.), who heads the Senate Committee on Health, Education, Labor and Pensions, announced an investigation into what he called Amazon’s “systematically underreported” injury rates, as well as its warehouse conditions and labor practices.
Steve Kelly, a company spokesperson, told the Washington Post that Amazon is still reviewing Sanders’s letter, but invited the senator to tour a facility.
Amazon suffered another legal L earlier this month when a federal judge in Seattle struck down a motion to dismissed a lawsuit against Amazon and Apple, which alleged the companies inflated iPhone and iPad prices.
Zoom out: In his April 13 letter, Jassy underscored Amazon’s ongoing challenges, particularly around costs, which have led to recent layoffs. Amazon workers walked out last month over frustration with the downsizing, company leadership, and an inflexible remote work policy, as well as concerns about Amazon's impact on the environment.
- On the bright side, Amazon’s cost-cutting measures seem to have worked in Q1, when the company saw only an 8.7% increase in operating expenses, the slowest they’ve risen in a decade.
- Sales also increased to $127.4 billion, a 9% YoY spike, and the company’s $3.2 billion in net income was a major improvement over the $3.8 billion loss reported a year earlier.