Bates White client FTC prevails in case alleging deceptive practices by Amazon

In a landmark resolution, Amazon.com has agreed to a record $2.5 billion settlement with the Federal Trade Commission (FTC) to resolve claims regarding Amazon’s Prime subscription program. The FTC alleged that Amazon used manipulative, coercive, and deceptive user-interface designs to mislead consumers into enrolling in its automatically renewing Prime subscriptions.

The FTC retained Neale Mahoney, Professor of Economics at Stanford University, as its economic expert. Prof. Mahoney was supported by a Bates White team in assessing liability and damages in the case. The analysis evaluated the subscription sign-up and cancellation processes, including the extent of unintended enrollments and attempted but unsuccessful cancelations.

Under the terms of the settlement, which is the second-highest restitution the FTC ever obtained, Amazon agreed to pay a $1 billion civil penalty and provide $1.5 billion in refunds to an estimated 35 million consumers harmed by its misleading Prime sign-up and cancellation processes. Prof. Mahoney’s damages analysis and calculations in his expert report closely align with the consumer restitution obtained by the settlement.

Prof. Mahoney was supported by a team that included Tanmay Belavadi, Cory Capps, Eric Emch, Jimena Galindo, Ben Hecht, Leyla Karakas, Michael Logue, Orville Mondal, Raghav Rakesh, Angela Rockwell, Steve Schulenberg, and Aparna Sengupta.