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FTC probes Amazon over customer concerns about unsubscribing from services

Yahoo Finance legal correspondent Alexis Keenan outlines the FTC's investigation into Amazon over complaints about the service's user interface when customers try to unsubscribe.

Video transcript

- The Federal Trade Commission has been investigating Amazon's Prime subscription business to determine if it misleads customers looking to sign up or cancel the service. And Amazon says that they have been harassing company executives in their pursuit. Joining us now for more on this, we want to bring in Yahoo Finance's Alexis Keenan. Alexis.

ALEXIS KEENAN: Hi, Seana. Yes. So this filing comes from Amazon in this investigation that was launched about a year and a half ago by the FTC. And what the FTC is looking at is the practices of Amazon in terms of customers on the Prime platform, signing up for the service or trying to cancel it.

There were concerns there that it was too difficult for customers. And that came after complaints from a consumer group in January of 2021 saying that there were unnecessary hurdles put in place for customers to get rid of the subscription. The way they put it they said, Prime subscription model is a roach motel where getting in almost as effortless but escape is an ordeal.

So this March, though, Business Insider, they reported that some internal documents from Amazon showed that the company had concerns since 2017 that the model that they had the interface for customers signing up and getting rid of the service that it was possibly problematic and that possibly customers felt manipulated into signing up for Prime when they had, for example, trial memberships would convert on over to permanent memberships. But they left that interface in place despite those concerns.

Now, Amazon, for its part, it's saying that these requests now coming from the FTC are escalating, that they're becoming more broad in scope, and that the agency is just asking for more and more. And that includes testimony they want from founder Jeff Bezos as well as CEO Andy Jassy. And so they don't want those depositions to happen. They don't want to have to fulfill all these requests. So they're looking to have those canceled. That's one of the things they're asking for from the commissioners.

Otherwise, they want it limited. They don't want to have to produce as much as they have been. They said they have been cooperating throughout this investigation. They said that in June, they received just a breadth of requests. They're called civil investigative demands from the agency. They call them just unworkable and unfair.

So subscriberships, though, on the platform, these are really important-- it's an important part of Amazon's business. It's about 7% last quarter of total revenues for the company. So this will be decided, though, by a vote. The commissioners that has three Democrats right now, two Republicans, they're the ones who will decide what happens to this particular request. Guys.

- Alexis Keenan, good stuff. Thank you so much.