Dive Brief:

• The Federal Trade Commission accused Amazon’s counsel of trying to hinder its investigation into the company’s use of dark patterns to boost its Prime subscriptions in an amended complaint filed Sept. 20 with a federal district court in Washington state.
• “Amazon’s counsel assured the FTC’s counsel that, in substance, ‘I will get you what you need’ and would work ‘to identify the most efficient means of providing [the FTC] with the information [it] need[s] to complete [its] investigation,’” the agency said. But the counsel didn’t do that, and the FTC referenced “Amazon’s false cooperation assurances."
• The FTC raised the lack of cooperation from the company’s in-house counsel in its original complaint, filed in June, but the amended complaint lifts redactions that add detail to what the agency calls a bad-faith response by the company’s legal officer.   

Dive Insight:

The agency filed the amended complaint principally to add the names of three Amazon executives for their roles in maintaining the company’s use of dark patterns to boost Prime subscriptions. The term “dark patterns” refers to design tactics that try to influence people in their actions without them being made aware of it.

Neil Lindsay, Russell Grandinetti and Jamil Ghani, all senior officers with oversight over Prime, knew the company was using misdirection and other means to enroll consumers into Prime without their knowing it, the FTC said. They also knew consumers were being channeled into a lengthy and confusing process, called the Iliad Flow, to cancel their subscriptions.  

“Despite their knowledge of the problem and pleas from some employees to fix it, Amazon and its leadership—including Lindsay, Grandinetti, and Ghani—slowed, avoided, and even undid user experience changes that they knew would reduce Nonconsensual Enrollment because those changes would also negatively affect Amazon’s bottom line,” the FTC said. “As one internal memorandum stated, Amazon decided ‘clarifying’ the enrollment process was not the ‘right approach’ because it would cause a ‘shock’ to business performance.”

In-house counsel bad faith

In lifting many of the redactions, the agency revealed its frustrations with Amazon’s counsel over the discovery process after it issued a civil investigative demand letter to the company in early 2021. 

Among other things, the custodians and search terms that the counsel proposed in response to the CID led the agency away from relevant documents, the FTC said. After a year into the subject period, the company had produced only 9,000 documents, a fraction of what would have reasonably been expected. 

It wasn’t until a trade publication, Business Insider, published information that had been leaked to it from current and former Amazon employees that the agency understood why so few documents had been produced, according to the complaint. The problem resided in the search terms and custodians that were proposed.

“Amazon withheld the information by identifying combinations of search terms and custodians it knew would not surface the most probative—and inculpatory—material,” the FTC said. “Among other things, Amazon failed to identify as custodians key individuals who communicated extensively about the Prime enrollment and cancelation processes, including the most knowledgeable employees on these subjects. Amazon also failed to identify as custodians individuals the Business Insider article named as key decision-makers regarding the Nonconsensual Enrollment problem and the Iliad Flow.

“But for the Business Insider article,” the FTC continued, “Amazon’s failure to identify relevant custodians and search terms may have gone undiscovered.”

In another discovery frustration, the company misused privilege to protect internal communications about the Prime enrollment and cancelation processes from discovery, the agency alleged. Among other things, company counsel were being looped into communications even if the subject didn’t involve legal matters.

“By identifying (and causing others to identify) communications concerning Nonconsensual Enrollment and the Iliad Flow as privileged when they were not, Amazon … obstructed the FTC’s investigation, delaying the Commission’s ability to access the falsely-labeled material,” the agency said.  

Amazon declined a request to comment. “Unfortunately, this is headed to litigation,” a company spokesperson told Legal Dive.