Amazon’s Other Attempts to Delay the Commission’s Investigation

Amazon’s Other Attempts to Delay the Commission’s Investigation

225. On March 16, 2021, the Commission issued a CID to Amazon seeking information regarding the enrollment and cancellation practices associated with Prime. The CID directed Amazon to respond by April 15, 2021. (Redacted)

226. Amazon has over 1.5 million employees—i.e., potential document custodians— and its internal communications are replete with acronyms and other jargon—i.e., potential search terms—not readily identifiable to outsiders. Accordingly, as with any discovery process, the Commission had to, and did, rely on Amazon to participate in good faith in the discovery planning process, including by identifying appropriate custodians and search terms.

227. (Redacted) Amazon’s counsel assured the FTC’s counsel that, (Redacted) Amazon’s counsel also told the FTC’s counsel (Redacted) These assurances are consistent with any opposing counsel’s obligation to engage in good faith discovery planning. As detailed below, however, Amazon did not follow through on these assurances, (Redacted)

228. In the context of the customary need to rely on opposing counsel to act in good faith, Amazon counsel’s significant experience working on FTC investigations, (Redacted) the massive amount of potential document - custodians and search terms (many of which were unknowable to the Commission), and (Redacted) assurances (Redacted) throughout the Subject Period, the Commission agreed to rely on Amazon to provide—in the first instance—a sufficient response to the CID, including reasonable search terms and custodians, to enable the Commission to fairly evaluate Amazon’s Prime enrollment and cancellation practices. However, the Commission always reserved its right to ask for additional responsive information and additional search terms and custodians.

229. Accordingly, during the Subject Period, in response to Amazon’s assurances (Redacted) the Commission temporarily accepted (Redacted)

230. By March 14, 2022, one year later, Amazon had produced only a small amount of - material—fewer than (Redacted) documents—(Redacted)

231. On March 14, 2022, Business Insider published information leaked from current and former Amazon employees regarding the problems with Amazon’s Prime checkout enrollment flow and the Iliad Flow. The Commission quickly ascertained that Amazon had failed to disclose much of the now-leaked documents and information to the Commission, despite the fact that at least some of it was responsive to the outstanding CID. Amazon withheld the information (Redacted)

232. redacted

233. Pursuant to its reservation of rights, on April 19, 2022, the Commission issued an extensive follow-up demand for additional information. Amazon did not comply with this demand, (Redacted)

234. On June 30, 2022, the Commission issued an additional CID to Amazon as well as CIDs to various current and former employees seeking documents and testimony. Amazon also did not comply with the June 30, 2022 CID.

235. Instead, on August 5, 2022, Amazon and certain individual CID recipients (including executives Lindsay, Ghani, and Grandinetti) petitioned the Commission to quash the June 2022 CIDs. On September 21, 2022, the Commission denied the petition in every material respect. Three Commissioners noted with respect to one legal question Amazon raised as a basis to delay or avoid providing testimony: “The issue raised by this dispute is just one of many challenges facing FTC staff when pursuing complex investigations of targets that may perceive benefits to prolonging discovery.” Although the Commission ordered Amazon and the individual petitioners to fully comply, they did not.

236. Amazon’s effort to delay the Commission’s investigation included (redacted)

237. Amazon largely failed to timely produce the documents the CIDs require. - Although Prime is the world’s largest subscription program, Amazon produced fewer than (redacted) documents during the entire two-year investigation. Small businesses routinely produce more material to Commission investigators. Moreover, Amazon did not produce most of those documents before October 2022—eighteen months after the Commission’s initial CID.

238. Amazon’s (redacted) assurances described in Paragraphs 225 through 237 constituted intentional misconduct meant to delay the Commission’s investigation and this Complaint. Furthermore, these (redacted) assurances misled the Commission and affirmatively concealed the causes of action asserted herein during the Subject Period. Amazon’s wrongful conduct foreseeably caused, and did in fact cause, delay of the Commission’s investigation.

239. At all times, the Commission acted diligently. Among other things, during the Subject Period, the Commission reviewed material Amazon produced and provided feedback to Amazon Counsel through correspondence and teleconferences. The Commission also made supplemental requests and, to expedite Amazon’s response, demanded that the company accept a timeline for its production.

240. Amazon’s bad faith response to the Commission’s CID constitutes an extraordinary circumstance beyond the Commission’s control. But for Amazon’s effort to frustrate the Commission’s investigation, the Commission would have filed this action many months earlier. Amazon’s (redacted) assurances described in Paragraphs 225 through 237 delayed the Commission’s investigation during the period from April 15, 2021 (the initial CID return date) and March 14, 2022

241. Amazon’s largely unsuccessful petition to quash delayed the Commission’s investigation during the period of its pendency, from August 5, 2022 until September 21, 2022.

242. Based on the facts and violations of law alleged in this Complaint, the FTC has reason to believe that Defendant is violating, and is about to violate, laws enforced by the Commission because Defendant has engaged in ROSCA violations repeatedly and knowingly for years. Those violations are ongoing. Even if Amazon halts or has halted some problematic conduct, Amazon has (redacted)

243. Additionally, until shortly before the Commission filed this Complaint, Amazon used the Iliad Flow to persuade consumers to keep their Prime subscriptions. Amazon only revamped Iliad in response to pressure from the Commission, and without such pressure— including this lawsuit—Amazon would likely restore Iliad. Furthermore, the revamped cancellation process still contains problematic elements because the cancellation process remains difficult to locate on both desktop and mobile. Amazon still requires five clicks on desktop and six on mobile for consumers to cancel from Amazon.com. And both flows still require consumers to proceed through extraneous information unnecessary to the cancellation process and presented solely to discourage cancellation. The continued presence of these problematic elements illustrates that, although the form of the cancellation flow recently changed, Amazon’s mindset has not.

244. Indeed, Amazon considers changes to Prime enrollment and cancellation mechanisms as “(redacted)”decisions, meaning that those changes can be undone at any time.

245. Amazon is one of the world’s largest and most well-resourced companies. It has extensive legal resources including in-house and outside counsel with expertise in the FTC Act, ROSCA, and the company’s other consumer protection obligations. Amazon embedded inhouse counsel within the Prime Organization, and key decisionmakers Lindsay, Ghani, and Grandinetti (redacted)

246. Accordingly, Amazon has actual knowledge or knowledge fairly implied on the basis of objective circumstances that its actions are unfair or deceptive and are prohibited by ROSCA.

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