Unveiling the Veil: How Amazon's Prime Dilemma Puts Executives Under the Spotlight

A swirling tempest is about to engulf corporate America, and its epicentre is Amazon. The Federal Trade Commission (FTC) has filed fraud charges against the company, alleging that it tricked consumers into signing up for its Prime service. The litigation has put a spotlight not just on the way Amazon does business, but on a type of corporate wrongdoing that has a unique personal cost to its C-suite.

AMAZON's Prime Controversy: A Close Examination

The central allegation in the FTC’s lawsuit is that Amazon designed its Prime sign-up process to be ambiguous, and its cancellation process to be difficult to use; this, the FTC alleges, was to boost Amazon’s subscription numbers by deceiving consumers, a move that appears to violate core principles of informed consent.

In response to the FTC’s charges, Amazon argued that it had no objection to how it was communicating with ‘customers’ – thus implying that ‘they’ were mislead. However, it was not up to Amazon to define what Amazon meant by ‘they’ or what Alex ‘could do’. And the US district court was unmoved by Amazon’s semantic contortions. The court determined that there was sufficient preliminary evidence to believe that Amazon intentionally misled its customers and was fully aware it was doing so, contradicting Amazon’s claim that it merely used the words ‘could’ and ‘customers’ as it saw fit. The judge denied Amazon’s motion to dismiss the civil claim. The legal fight ahead is likely to define new boundaries of corporate culpability, unless Amazon settles out of court.

The Trail of Accountability Leads to the Top

Now attention has turned to Amazon executives Russell Grandinetti (senior vice president of international consumer), Neil Lindsay (vice president of Kindle), and Jamil Ghani (vice president of seller services), whose motions to dismiss personal liability claims were also denied by the court, which recognised an important legal principle: if corporate executives are personally involved in or authorise their companies’ misrepresentations, they too may be held personally liable for the illegality.

AMAZON's Defense and the Battle Ahead

In response to the allegations and the court’s decision, Amazon has displayed a mien of unbridled denial. The company continues to insist that its Prime service is popular with consumers and that its sign-up and cancellation procedures are clear. The company’s defence is built, in significant part, on reliance upon customer satisfaction; Amazon argues that it has acted neither unlawfully nor unconsumerily.

The Implications for AMAZON and Beyond

This lawsuit is a watershed moment for Amazon – and possibly for other tech giants built on the subscription model – because it captures both the rising pressure on ‘dark patterns’ – user interface designs that try to trick users into making unwanted decisions – and increasing calls for corporate transparency.

Consumer Trust at a Crossroad

But, more importantly, the FTC’s complaint against Amazon raises a question that goes far beyond the arcana of law: what is the relationship that companies should have with their customers? In an age when subscription models abound, ease of enrolment and cancellation can make the difference between firms that engender trust – and those that don’t. In Washington State, Amazon’s ongoing Prime story is proof of that.

About AMAZON

First launched in 1994 by its founder, Jeff Bezos, as an online bookseller, Amazon now takes on the disruptive mantle of one of the world’s most muscular tech companies via the monolithic nature of its rapidly expanding ecosphere, which includes e-commerce, cloud computing, digital streaming and artificial intelligence. Launched in 2005, Amazon Prime, the company’s subscription service, offers perks such as free two-day shipping, streaming and exclusive access to deals. With the company registering annual revenues in excess of $33 billion in 2017, and with a current stock valuation of $820 billion, Amazon’s expansion is by no means over. In the face of such corporate expansion, the company’s consumer transparency and unquestionable ethical business practices will continue to be held up to public and legal scrutiny.