This morning the FTC announced a historic settlement with Amazon and two of its executives resolving alleged violations of ROSCA concerning the manner by which Amazon enrolled consumers in and managed cancellation practices for its PRIME subscription program. In the immortal words of George Costanza, "This is BIG, Jerry! BIG!" The 26 page settlement agreement requires Amazon to pay a whopping $1B civil penalty (that's BILLION ... with a B, the largest ever for a rule violation!) and return $1.5B to 35MM affected PRIME customers. The settlement's injunctive provisions generally mirror ROSCA's requirements and prohibitions (Read: nothing much to see here, folks), with two noteworthy additions as "fencing in" relief:
- Include a clear and conspicuous button for customers to decline PRIME; Amazon can not use a button that says, “No, I don't want Free Shipping” (File under "Dark Patterns: shaming"); and
- Create an easy way for consumers to cancel PRIME that is not difficult, costly, or time-consuming, and must be the same method that consumers used to enroll. This requirement currently exists in several state auto renewal laws and was included in the FTC's now vacated amended Negative Option Rule (NOR).
Some additional observations:
- This is the FTC's 4th publicly reported ROSCA case in 2025 (there could have been more that were handled quietly with a handshake), which is a bit of a surprise given its leadership's documented record of favoring regulatory restraint. Who knew? Also, they have done all of this without the gunpower of the vacated NOR. Perhaps the FTC is trying to prove it doesn't need more weapons in its enforcement arsenal to investigate and prosecute unfair and deceptive auto renewal practices?
Possibly overheard in the 600 Pennsylvania Ave cafeteria... "We don't need no stinkin Negative Option Rule." (not a real quote.. we totally made it up) - From what we can tell before today (ohhh..foreshadowing) the answer to the above question was not really, as all indications were that the NOR is dead, and good riddance! But Section VI of the Amazon settlement may suggest otherwise, stating "to the extent the Commission promulgates an amended rule or regulation governing negative options or subscriptions, the requirements of that rule (as long as it remains applicable, binding, and in effect) will supersede the requirements in Sections I through V of this Order." Ohhhh FTC... what are you hinting at, eh? Ya'll gonna try to bring back the NOR? Interestingly, the Chegg settlement announced just a week earlier did not contain this provision. Intrigue! An intentional act by the FTC? Included at the request of Amazon counsel? Stay tuned kids... this ride aint over yet!
Cobalt LLP
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