Amazon Prime is on trial. Here's what to know

It’s a different kind of Amazon $AMZN trial — not the kind that lets you try out the product.

On Monday, a jury in Seattle will begin hearing a case that could change how Amazon runs Prime, its $139-a-year subscription. Some 200 million people worldwide subscribe to Prime for quick shipping, streaming entertainment, closely-watched Prime Day deals, and other membership benefits — with the majority of customers concentrated in the U.S..

For Amazon, Prime represents a business worth over $40 billion in annual revenue, and that’s from the subscriptions alone. Independent research firms suggest that Prime customers also spend about twice as much as non-members, further underlining the importance of the program to Amazon’s retail business.

But the FTC alleges that Amazon tricked tens of millions of people into signing up for Prime without fully realizing they’d done so, then made it so frustrating to cancel that customers gave up. Court filings highlight how the company’s own nickname for the cancellation process was the “Iliad” in a reference to a Greek epic about a war that dragged on for years — and years, and years.

Details of the FTC suit

“Rather than simply allowing consumers to cancel, each page bombarded them with offers and links to keep them from completing the flow,” the FTC argued. The agency also won a pre-trial ruling that Amazon violated federal law by taking customers’ billing details before fully disclosing Prime’s terms.

Amazon has denied the claims. A spokesperson, providing a statement to the New York Times, said that people join Prime “because it’s useful and valuable,” pointing out that Prime ranks “among the highest performing subscription programs of any kind, as measured by renewal rates and customer satisfaction.” After all, Prime members are Amazon’s most loyal shoppers. Amazon also points out that, given Prime's massive, globe-spanning scale, it's all but inevitable a small percentage of customers will misunderstand aspects of membership.

Now the FTC case raises broader questions: Was the Prime business built on genuine loyalty, or on what regulators call “dark patterns,” design choices meant to steer customers into paying more than they intended and discourages them from cancelling services? Executives have admitted they wanted people to “pause and think” before leaving. That’s a common-enough practice across many subscription businesses, but not all such practices rise to the level of an FTC suit and a trial. (Amazon faces a separate FTC antitrust suit.)

Executives could be held personally liable

If the jury finds Amazon broke the law, Judge John H. Chun will decide penalties. Two senior executives holding leadership positions within the company’s Prime subscription business, Neil Lindsay and Jamil Ghani, could even be held personally liable.

According to an FTC release, “The executives were informed by other Amazon employees in emails, meetings, and presentations about these issues and encouraged to make changes to stop Amazon from tricking its customers, but the executives chose not to act.”

The release said that, instead, the named executives “slowed, avoided, and even reversed user experience changes that they knew would reduce nonconsensual enrollment because those changes would also negatively affect Amazon’s bottom line.”