The FTC charges three Amazon executives in an amended complaint about Prime

An Amazon worker moves boxes on Amazon Prime Day in New York City’s East Village, July 11, 2023.

Spencer Platt | Getty Images

The Federal Trade Commission on Wednesday updated its complaint against Amazon over its “deceptive” sign-ups and cancellations, adding three top executives as defendants.

The amended complaint alleges that senior Amazon executives overseeing Prime downplayed employees’ concerns about enrolling members of the popular subscription program without their consent.

The file names Russell Grandinetti, Amazon’s senior vice president of international consumer, and its president Jamil Ghani, as well as Neil Lindsay, a senior vice president who previously oversaw Prime’s technology and business operations before being appointed to lead the company’s health services. Both Grandinetti and Lindsay work on Amazon CEO Andy Jassy’s S-Team, a close-knit group of prominent executives in many areas of the company’s business.

Previously redacted emails included in the updated complaint show that Amazon employees pushed executives to address issues with customers being directed to sign up for Prime without their consent and to make changes so the company wouldn’t “deceive” its customers.

In one July 2020 exchange, an employee wrote to Ghani: “An unknown fee of $12.99 could mean grocery money for a family, gas to fill up a car, or just the last bit of money to pay the rent… do we think so?” They should too [have] To call?”

The filing also includes new details about how Amazon executives would evaluate potential negative impacts on their business if they wanted to “clarify” the Prime enrollment process. Amazon has more than 200 million Prime members globally, and the program has generated billions of dollars for the company. Membership costs $139 per year and includes perks like free shipping and access to streaming services.

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Subscription services revenue, which includes Prime membership, totaled $9.8 billion at Amazon Latest quarterly earnings report.

Teams of Amazon researchers and designers discovered that the Prime sign-up process at checkout contained some aspects that were designed to “trick people into signing up,” the complaint said. These issues were also studied as part of an internal initiative codenamed “Project Lucent”.

Amazon executives and employees met in 2018 about “Project Lucent,” with the primary goal being to discuss “the number of Prime subscriptions.” [is] Amazon. . . “Willing to forfeit in order to prevent an unintended Prime subscription,” according to the complaint.

At the meeting, Prime organization representatives opposed changes that would reduce subscription numbers because Amazon rates Prime’s performance “heavily” based on that metric, the filing said.

A draft memo compiled by key unit members acknowledged that design changes to the registration process would cause a “shock” to business performance.

Amazon spokesman Tim Doyle called the FTC’s decision to add its executives as defendants “unjustified under the facts and the law.”

“These leaders have worked tirelessly to make Prime an exceptional program that customers love, and they have our full support,” Doyle said in a statement. “The claim that their efforts were made only in the utmost good faith is baseless and represents a radical departure from the FTC’s standards for such claims.”

Doyle added that the complaint “is full of cherry-picked quotes that were taken out of context and mischaracterized by the agency.”

The FTC has on other occasions charged executives in complaints. For example, the agency named Meta CEO Mark Zuckerberg as a defendant in the lawsuit seeking to block Meta’s acquisition of virtual reality fitness app maker Inside Unlimited. However, The Federal Trade Commission later said She agreed to drop him as a defendant after Meta said Zuckerberg would not personally seek to buy the company. The agency also sought to hold Drizly’s CEO accountable in a settlement over alleged security failures.

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The FTC is expected to file a separate, long-awaited antitrust lawsuit against Amazon as soon as this month, according to multiple reports.

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