Andrew Lustigman and Morgan Spina Publish Article in NYLJ on Amazon’s $2.5B Settlement with the FTC and the Continued Focus on Subscription-Based Practices

Andrew Lustigman, Chair of Olshan's Advertising, Marketing & Promotions Group and Co-Chair of the firm’s Brand Management & Protection Group, and Branding Department associate Morgan Spina published an article in New York Law Journal entitled “Continued Focus on Subscription-Based Practices Leads to $2.5 Billion Amazon Settlement With FTC.” In the article, Andy and Morgan discuss the significance of Amazon’s recent $2.5 billion settlement with the Federal Trade Commission (FTC) surrounding their alleged manipulative Prime subscription cancellation process. They encourage businesses to use this enforcement action as a reminder to evaluate their practices to ensure transparency and simple cancellation practices remain at the forefront. “In the complaint filed in 2023, the FTC cited Amazon’s unnecessarily complex cancellation journey, described by the FTC as a ‘four-page, six-click, fifteen-option process’...Creating unnecessary friction in the cancellation process is a key indicator of a noncompliant automatic renewal program, and as exemplified here, carries the risk of significant enforcement,” Andy and Morgan write. Since the complaint, the FTC has shifted to an entirely Republican-led agency with the presidential shift to Trump and the Democratic commissioner removed. The change in political dynamic produced speculation that the case would be dropped, however the opposite occurred. “Amazon isn’t alone,” Andy and Morgan note. “Just weeks before the Amazon agreement, the FTC finalized a separate settlement with Chegg Inc., an ed-tech company, for similar violations related to auto-renewing subscriptions. In that case, the FTC alleged that more than 200,000 customers were billed after attempting to cancel, and that Chegg’s online cancellation process was challenging to find and confusing to use.”