Is Amazon’s Customer Experience Throne on Line in FTC Complaints?

Is Amazon’s Customer Experience Throne on Line in FTC Complaints?

The Federal Trade Commission is coming after Amazon. Again. And this time it brought 17 friends.

This week, the FTC and 17 state attorneys general filed a lawsuit in US District Court claiming that the online retail and technology company is a “monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power.”

Three months ago, the FTC lodged a complaint in US District Court accusing Amazon of “manipulative, coercive or deceptive” to trick customers to enroll in auto-renewal programs for Amazon Prime.

Amazon unleashed a 1,897-word defense Tuesday, Sept. 26 and called the FTC’s lawsuit “misguided.” The lawsuit, if successful, would force Amazon “to engage in practices that actually harm consumers and the many businesses that sell in our store — such as having to feature higher prices, offer slower or less reliable Prime shipping, and make Prime more expensive and less convenient,” according to the blog post from David Zapolsky, senior vice president, Amazon Global Public Policy & General Counsel.

“The FTC’s complaint alleges that our pricing practices, our Fulfillment by Amazon offering, and Amazon Prime are anticompetitive,” Zapolsky wrote. “In so doing, the lawsuit reveals the Commission’s fundamental misunderstanding of retail.”

The FTC, however, feels it knows retail and Amazon’s practices quite well.

“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” FTC Chair Lina M. Khan said in a Sept. 26 statement. “The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”

The antitrust lawsuit comes amid the government’s similar pursuits against Google, which this week featured testimony from another tech giant, Apple. 

Why the big fuss over Amazon? Simply, it’s worth watching if you’re a customer experience leader. The Amazon customer experience is the beacon of great customer experience, landing in many slide decks, keynotes and customer experience presentations far and wide. 

Will This Affect Amazon Customer Experience?

So it’s worth watching to see if the mighty CX Queen will fall. Fact is, these are only lawsuits/complaints that likely get held up in court for years and end up in settlements with Amazon admitting no wrongdoing.

Legal analysis aside, the real thing CX leaders should be watching for in this FTC vs. Amazon duology? Lessons learned from the Amazon customer experience, whether it’s good or bad — particularly in the June complaint against Amazon customer experience about Prime customer renewals and cancellations.

Jeannie Walters, CCXP, founder and chief experience investigator at Experience Investigators, told CMSWire that Amazon probably has a ton of data that can show how customers love Prime and are happy to renew. 

Speaking of the June 2023 FTC complaint, she said, “The argument of offering discounts to stay for those customers trying to cancel doesn’t seem illegal, in my opinion. It’s a common tactic, and I bet they have lots of data that shows how many customers take them up on the discounted offers.”

There is an argument that perhaps the cancellation process should be easier, Walters added, or maybe the optional services for sellers should be more clearly defined. “But,” she added, “these seem like customer journey improvements that most organizations need to make. This doesn’t strike me as particularly egregious.”

CX leaders should see this as a reminder to do the right thing for customers, even when it’s tempting to lure them with tricky offers or make leaving overly challenging, Walters added. 

“These might not be illegal moves for most organizations,” she said, “but it’s clear the government and others are watching.”

Related Article: Amazon’s Latest AI Gives Customer Reviews a Highlight Reel

An Amazon Prime delivery truck drives down a street, representing a part of the Amazon customer experience.
An Amazon Prime delivery truck drives down an Anaheim, Calif. street, representing a part of the Amazon customer experience.Matt Gush

FTC’s Case Against Amazon Monopoly

Now about those two FTC actions. Here’s what the FTC lawsuit alleges this week in the monopoly case:

Overview of the FTC Complaint Against Amazon

The lawsuit addresses Amazon’s alleged deceptive and unfair acts or practices in violation of Section 5(a) of the FTC Act. The FTC alleges that Amazon engaged in deceptive and unfair practices in the operation of its e-commerce platform. The FTC contends that Amazon made misrepresentations about the price, quality and source of products, as well as the nature and terms of its Prime membership.

Additionally, Amazon is accused of interfering with consumers’ ability to make informed purchasing decisions.

Misrepresentation of Prices

Amazon is accused of misleadingly displaying reference prices (e.g., list prices or strike-through prices) to exaggerate the savings consumers would receive. This could make a deal look more attractive than it truly was.

Amazon’s Choice

The FTC alleges that the “Amazon’s Choice” badge was misleadingly awarded to products. Amazon didn’t adequately disclose the criteria for this designation, potentially leading consumers to believe that these products were objectively the best available options.

Prime Membership

The complaint asserts that Amazon did not adequately disclose the terms of its Prime membership, including the recurring nature of the charges and the difficulty of canceling the membership.

Review Manipulation

Amazon is accused of allowing fake reviews on its platform, thereby misleading consumers about the quality and popularity of products.

Sale of Counterfeit Products

The FTC alleges that Amazon sold or facilitated the sale of counterfeit products on its platform, misleading consumers about the authenticity and quality of these products.

Interference with Third-Party Sellers

Amazon is alleged to have unfairly restricted third-party sellers from offering lower prices on other platforms, thereby limiting competition.

Customer Data Practices

The complaint also touches upon Amazon’s collection and use of consumer data without adequate disclosure or consent.

What’s Next for the FTC’s Lawsuit Against Amazon?

The FTC seeks a permanent injunction to prevent Amazon from engaging in the alleged deceptive and unfair practices in the future. The commission also seeks restitution, refunds or other monetary relief for affected consumers.

Amazon’s Defense: We Bring Low Prices to Customers

Here’s a breakdown of Amazon’s 1,897-word defense by its general counsel:

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