A U.S. judge ruled on Wednesday that Amazon.com violated consumer protection laws by collecting subscribers' billing information before disclosing the terms of its Prime membership service, giving the Federal Trade Commission (FTC) a partial victory.
This ruling by U.S. District Judge John Chun puts Amazon.com at a disadvantage in the upcoming trial for a case that accuses the company of using deceptive practices to entice users into Prime memberships.
The FTC is prepared to argue in court that the online retailer automatically enrolled tens of millions of users in Prime memberships without their consent and obstructed millions of users from canceling their memberships through a complicated cancellation process.
The agency alleges these actions violated the Restore Online Shoppers' Confidence Act (ROSCA).
Chris Mufarrige, Director of the FTC's Bureau of Consumer Protection, stated: "Today's ruling confirms that Amazon.com defrauded American consumers by failing to disclose the full terms of Prime membership before collecting consumers' payment information. The FTC under Trump-Vance will work to seek justice for consumers."
The judge also ruled that if the FTC proves Amazon.com's violations during trial, two Amazon.com executives must bear corresponding responsibility. Additionally, the judge prohibited Amazon.com from defending itself by arguing that ROSCA does not apply to Prime membership registrations.
An Amazon.com spokesperson did not immediately respond to requests for comment. The company has previously denied the related allegations.