By Sean Heather, Chamber of Commerce
Prior to her ascension to chair the Federal Trade Commission, Lina Khan gained popularity in progressive legal circles for her criticism of the popular American retailer Amazon. Her 2017 article in the Yale Law Review, “Amazon’s Antitrust Paradox” not only focused on the titular retailer but also sought to counter the longstanding pro-consumer approach to enforcement writ large. Chair Khan has a long professional history focused on scrutinizing Amazon. For that reason, it is troubling that the agency she oversees, the Federal Trade Commission (FTC), appears to be disregarding traditional due process norms when engaging with the company.
On June 21st, the FTC announced a lawsuit against Amazon for what the agency calls “non-consensual subscriptions and cancellation trickery.” The lawsuit raises questions about whether the agency is demanding a “perfect” signup and cancellation process, substituting the agency’s own judgment about how Amazon should manage its interactions with its customers. Amazon will now have to defend its actions and a court will decide whether the evidence is sufficient to find a law violation.
For its part, Amazon’s Prime service has proven widely popular among consumers, so it is far from clear that there exists a deep persistent pattern of consumer harm emanating from the company. What is interesting about this case is how we got here. Amazon’s public statement in response to the FTC filing its complaint, in part, stated:
“We also find 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 before they filed a lawsuit. While the absence of that normal course engagement is extremely disappointing, we look forward to proving our case in court.“
Several things jumped out from this statement. Why did the FTC spring the lawsuit on Amazon as a surprise? Moves to litigate by surprise are the kind of tactic used by the FTC in severe situations, often fraud cases where the agency is concerned that prior notice will result in asset dissipation and document destruction. It is wholly unnecessary in routine cases where the defendant is working in good faith to resolve the issue at hand. Further, without any forewarning of the lawsuit, Amazon was prevented from fully being able to explain itself to the Commissioners, a fundamental due process right that is routinely afforded even to those who are being accused of engaging in hard core fraud.