Walmart+ and Amazon Prime Are Under Fire—Here's Why
Major retailers are facing scrutiny for their membership subscription tactics.
Every month, we see automatic charges hit our bank accounts. In many cases, that's because these days, memberships and subscription services are all the rage—and we're willing to pay up for deals from our favorite retailers. If you're planning to shop there either way, it's hard to pass up enticing incentives like free delivery, exclusive savings, and more. But in many cases, these perks don't come without a catch. In fact, two major retailers have now come under fire for their members-only services. Read on to find out why Walmart+ and Amazon Prime are both facing backlash.
Amazon is being sued by the FTC over its Prime membership.
A major battle is brewing between regulators and an e-commerce giant. On June 21, the Federal Trade Commission (FTC) filed a lawsuit against Amazon in federal county for the Western District of Washington.
In an accompanying press release, the FTC explained that is suing the online company because it has "knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime" through manipulative, coercive, and deceptive tactics.
The agency also said that Amazon "knowingly complicated the cancellation process for Prime subscribers" by slowing or rejecting changes that would have made it easier for users to cancel their Prime memberships.
"Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money," FTC Chair Lina M. Khan said in a statement.
Khan added, "These manipulative tactics harm consumers and law-abiding businesses alike. The FTC will continue to vigorously protect Americans from 'dark patterns' and other unfair or deceptive practices in digital markets."
But Amazon is denying the agency's claims.
Amazon Prime is the "world's largest subscription program," according to the FTC's suit. The agency said that the membership's subscription fees account for $25 billion of Amazon's yearly revenue, with 70 percent of that revenue coming from U.S. consumers.
"One of Amazon's primary business goals—and the primary business goal of Prime—is increasing subscriber numbers," the lawsuit states, claiming that Amazon has done this by tricking customers.
When Best Life reached out to Amazon about the case, the company denied the accusations.
"The truth is that customers love Prime, and by design we make it clear and simple for customers to both sign up for or cancel their Prime membership," Amazon said in a statement. "As with all our products and services, we continually listen to customer feedback and look for ways to improve the customer experience, and we look forward to the facts becoming clear as this case plays out."
The FTC has been investigating the enrollment and cancellation capabilities of Amazon's Prime program since March 2021, according to Reuters. But in its statement, Amazon said it also finds "it concerning that the FTC announced this lawsuit without notice to us, in the midst of our discussions with FTC staff members to ensure they understand the facts, context, and legal issues, and before we were able to have a dialog with the commissioners themselves."
Walmart has also faced backlash for its membership program.
Walmart is rather new to the subscription scene, having just started its Walmart+ membership in 2020, Reuters reported. But now, the big-box retailer is also feeling the heat.
Walmart was slapped with a lawsuit in 2022 from a Michigan shopper who claimed that Walmart also used "deceptive subscription practices," per Reuters.
The shopper alleged that these practices included Walmart automatically charging customers after their "free" Walmart+ trial, creating challenges to cancel subscriptions, and not honoring cancellations after shoppers opted out of the service.
"Defendant's false, misleading, and deceptive representations and omissions are material in that they are likely to influence consumer subscribing decisions," the lawsuit stated.
Some say the FTC should also take action against the retailer.
The Michigan shopper has since withdrawn his lawsuit against Walmart, Reuters reported. The plaintiff's lawyer previously said that both the parties had "resolved the action to our mutual satisfaction." But that may not mean the issue is fully resolved.
Following the FTC's filing against Amazon, many consumers have taken to social media to ask the agency to take action against the big-box retailer as well.
"@FTC you should also check out Walmart plus," one person wrote in a June 22 tweet. "They dupe the customer to sign up and make it hard to cancel and you never get the full refund."
Another user tweeted that same day, "FTC needs to do Walmart for its stupid Walmart plus next…"
Best Life reached out to Walmart about the lawsuit and more recent Walmart+ complaints, and we will update this story with their response.