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Tag: Cancel

  • Economics Expert’s Testimony on Prime Enrollments and Cancellations Admitted

    Economics Expert’s Testimony on Prime Enrollments and Cancellations Admitted

    The Federal Trade Commission contended that Amazon tricked, coerced, and manipulated consumers into subscribing to Amazon Prime. According to the FTC, this was accomplished by failing to disclose the material terms of the subscription clearly and conspicuously and by failing to obtain the consumers’ informed consent before enrolling them. The FTC also alleged that Amazon did not provide simple mechanisms for subscribers to cancel their Prime memberships. As a result, the FTC sued Amazon.com, Inc. and three of the company’s executives, Neil Lindsay, Russell Grandinetti, and Jamil Ghani.

    The FTC requested that Dr. Neale Mahoney, Ph.D. provide an expert opinion on (1) “Whether Amazon’s Cancellation Survey provides a reliable basis from which to draw inferences regarding the behavior of its customers”; (2) “The extent to which customers were unintentionally enrolled in Amazon Prime, and how much such consumers paid to Amazon in Prime membership fees during their memberships”; and (3) “The extent to which customers attempted to cancel their Amazon Prime memberships and believed that they had done so but did not in fact complete the cancellation process, as well as how much such customers subsequently paid to Amazon in Prime membership fees.”

    The Defendants filed a motion to exclude Mahoney’s expert testimony. They contended that his testimony on unintentional Prime enrollments and cancellations is neither relevant nor reliable.

    Economics Expert Witness

    Dr. Neale Ashok Mahoney, Ph.D. is a Professor of Economics at Stanford University. He received a Ph.D. and M.A. in Economics from Stanford University. And he has taught economics courses at both Stanford University and the University of Chicago’s Booth School of Business.

    Want to know more about the challenges Neale Mahoney has faced? Get the full details with our Challenge Study report. 

    Discussion by the Court

    Mahoney’s report offered five opinions: First, Amazon’s Cancellation Survey provided a reliable basis to conclude that a significant number of Prime enrollees unintentionally enrolled in Amazon Prime. Second, unintentional enrollments in Amazon Prime through the at-issue “upsells” led to millions of dollars in harm. Third, a significant number of Prime customers who entered Amazon’s cancellation process did not complete the process and continued to pay Prime subscription fees to Amazon. Fourth, Prime benefit usage patterns showed that a significant number of Prime subscribers exited the cancellation process with the mistaken belief that they had cancelled their Prime subscription. Fifth, Prime subscribers who exited the cancellation process with the mistaken belief that they had cancelled their Prime subscriptions led to millions of dollars in harm. 

    Unintentional Enrollment Harm

    Defendants contended that Mahoney’s report is unreliable because it “assumes that the 99.998 percent of customers who intended to enroll in Prime nevertheless suffered some compensable harm because a very small fraction of other customers enrolled unintentionally.” But this argument is based on the misplaced premise that “[t]he FTC must prove its case by a preponderance of the evidence,” so only the 49 out of 2.7 million customers with a prediction score greater than 50 were likely harmed.

    Defendants next argued that “intent to subscribe is a binary choice; a consumer either meant to sign up or they did not.” Yet Defendants provided no evidence or caselaw to support this conclusory assertion.

    Defendants further criticized Mahoney’s analysis because he assumed “all subscribers who answered [the Amazon Cancellation Survey] by choosing ‘did not intend (DNI)’ are unintentional enrollments.” Even though Defendants have conjured up a hypothetical scenario where a subscriber might have selected DNI when they actually intended to sign up for Prime, that does not make Mahoney’s inference unreasonable.

    Defendants’ final argument is that Mahoney failed to consider the benefits that consumers gained from having a Prime subscription.

    Analysis

    However, Mahoney’s analysis logically advances the FTC’s argument that consumers were harmed by unintentional enrollment in Amazon Prime. This analysis will similarly help the factfinder determine facts that are in dispute. Mahoney also used techniques that enjoy wide acceptance in the field of economics and he shows that he appropriately applied these techniques to facts of this case. As a result, the Court found that the FTC has met its burden to establish by a preponderance of the evidence that Mahoney’s unintentional enrollment analysis is both relevant and reliable. The FTC has also met its burden of showing that Mahoney’s analysis is reliable even though it does not account for any potential benefits that a consumer gained from having a Prime subscription.

    Unintentional Cancellation Harm

    Defendants contended that Mahoney’s unintentional cancellation analysis is flawed too. They fault Mahoney for failing to failing to “separate lawful from unlawful conduct.” But the FTC alleged “all Prime subscriptions involve unlawful conduct as Amazon never had Restore Online Shoppers’ Confidence Act-compliant cancellation.” The hypothetical scenarios envisioned by Defendants did not render Mahoney’s analysis unreliable, nor did they show he cannot separate lawful from unlawful conduct. 

    Defendants’ final argument is that Mahoney’s unintentional cancellation analysis is unreliable because it failed to consider the benefits Prime subscribers received when they failed to cancel their memberships. This argument failed for the same reasons it failed for Mahoney’s unintentional enrollment analysis. The FTC alleged that the fraud was in Prime’s cancellation mechanisms, not the value of Prime. Thus, it was appropriate for Mahoney to include the full value of subscribers’ Prime subscription in his analysis.

    Much like his analysis of harm from unintentional enrollments, Mahoney’s unintentional cancellation analysis logically advances the FTC’s argument that consumers were harmed when they mistakenly believed they cancelled their Amazon Prime subscription. This analysis will also help the factfinder determine facts that are in dispute. Mahoney used techniques that enjoy wide acceptance in the field of economics and he shows that he appropriately applied these technique to the facts of this case. As a result, the Court found the FTC met its burden to establish by a preponderance of the evidence that Mahoney’s unintentional cancellation analysis is both relevant and reliable.

    Held

    The Court denied the Defendants’ motion to exclude Neale Mahoney’s testimony.

    Key Takeaway:

    Mahoney used techniques that enjoy wide acceptance in the field of economics and he showed that he appropriately applied these techniques to facts of this case.

    The Court found that the FTC met its burden to establish by a preponderance of the evidence that Mahoney’s unintentional cancellation and enrollment analyses are both relevant and reliable.

    Case Details:

    Case Caption: Federal Trade Commission V. Amazon.Com, Inc., Et Al.
    Docket Number: 2:23cv932
    Court Name: United States District Court for the Western District of Washington
    Order Date: August 22, 2025
  • Marketing Expert Employed Techniques Widely Accepted in Market Research Community

    Marketing Expert Employed Techniques Widely Accepted in Market Research Community

    The Federal Trade Commission contended that Amazon tricked, coerced, and manipulated consumers into subscribing to Amazon Prime.  According to the FTC, this was accomplished by failing to disclose the material terms of the subscription clearly and conspicuously and by failing to obtain the consumers’ informed consent before enrolling them. The FTC also alleged that Amazon did not provide simple mechanisms for subscribers to cancel their Prime memberships. The FTC sued Amazon.com, Inc. and three of the company’s executives, Neil Lindsay, Russell Grandinetti, and Jamil Ghani.

    Amazon requested that their marketing expert, Ronald T. Wilcox, conduct two surveys: (1) “A survey to assess the extent to which Prime members can locate and complete the desktop version of the Cancellation Flow on Amazon.com as described in the Amended Complaint” (Cancellation Survey); and (2) “A survey to assess the experiences of US consumers with free trials of memberships or subscriptions that automatically turn into paid memberships or subscriptions unless cancelled” (Free Trial Survey).

    Wilcox reported that the Cancellation Survey, designed to assess which Prime members can locate and complete the desktop version of the Cancellation Flow on Amazon.com, shows 99.8% of respondents (529 of 530) located the Cancellation Flow and 96.4% of respondents (511 of 530) paused or ended their Prime membership.

    The Free Trial Survey, designed to assess the extent of U.S. consumers’ experience with free trial memberships or subscriptions, particularly those that automatically turn into paid memberships or subscriptions, found 92.5% of respondents currently pay for at least one of the memberships or subscriptions on the list provided to respondents.

    The FTC, however, filed a motion to exclude these survey results. 

    Marketing Expert Witness

    Ronald T. Wilcox, Ph.D., is a Professor of Business Administration at the University of Virginia’s Darden Graduate School of Business Administration. He conducts research and teaches classes on marketing. His areas of expertise within marketing are branding, consumer behavior, surveys, statistical modeling of consumer choice, and the public policy implications of marketing.

    Get the full story on challenges to Ronald Wilcox’s expert opinions and testimony with an in-depth Challenge Study. 

    Discussion by the Court

     FTC asserted that the results of the first survey should be excluded for two reasons: (1) Wilcox recruited and sampled only the most technology-savvy, attentive survey takers; and (2) he failed to ensure the respondents were representative of U.S. Amazon Prime members seeking to cancel their memberships. The FTC likewise filed a motion to exclude the results of the second survey because it said nothing about respondents’ understanding of Prime memberships.

    Wilcox’s Surveys

    Cancellation Survey

    The FTC said that testimony about the Cancellation Survey must be excluded because nothing indicated the respondents were representative of U.S. Prime members. In particular, it argued that Wilcox selected only the most tech-savvy, attentive respondents to take this survey, and that he ignored this bias. And the survey must also be excluded, according to the FTC, because Wilcox did not verify that the respondents appropriately represented key demographics.

    The Court agreed that testimony about the Cancellation Survey is admissible because Wilcox used techniques with general acceptance in the market research community.

    The Cancellation Survey was also intended to test whether respondents were able locate the Cancellation Flow and pause or end a Prime membership. This was pertinent to the allegation that Amazon did not provide simple mechanisms for subscribers to cancel their Prime memberships.

    The FTC’s contrary arguments do not dictate a different conclusion. First, it said that the sample group was skewed towards tech-savvy participants.  But this is a critique of the survey’s design and methodology, which goes to weight—not admissibility. Similarly, the FTC’ second argument against Wilcox’s use of attention checks goes to weight because technical unreliability—for example, issues with the format of the questions or how the survey was conducted—goes to the weight afforded a survey, not admissibility. 

    The FTC’s third point, that it is problematic to have a greater percentage of people who have used the Cancellation Flow among the survey respondents than exists in the general population of Prime members, also goes to weight. As does its fourth argument, that Wilcox did not consider relevant socio-demographic information. These third and fourth arguments both go to weight because “[t]he selection of an inappropriate universe generally affects the weight of the resulting survey data, not its admissibility.” 

    Free Trial Survey

    The FTC next claimed the Free Trial survey had to be excluded because it was irrelevant. It objected to this survey on the grounds that it said nothing about Prime membership, and whatever respondents thought about a free trial of a gym membership, streaming service subscription, or other subscription service other than Prime had no bearing on this litigation. In addition, the FTC argued that the survey had to be excluded because Wilcox did not provide any evidence to connect the results of the Free Trial Survey to consumers’ understanding of Prime’s enrollment process.

    Defendants responded that Wilcox’s testimony about this survey is relevant for three reasons. First, the survey concerned the FTC’s allegation that consumers are unaware of Prime’s auto-renewal features. Second, the FTC has repeatedly argued that the context of disclosures matters, and this survey provides context about consumers’ understanding of subscriptions, free trials, and auto-renew features. Third, Defendants’ online consumer behavior expert connected the Free Trials survey to her opinions that many consumers are familiar with free trials and that consumers’ familiarity with free trials suggests they are familiar with free trial enrollment and cancellation.

    The Free Trial Survey is related to the FTC’s argument that Amazon’s strategies “made it unlikely many ordinary consumers would even look for Prime’s material terms, much less notice that Amazon was enrolling them in a Prime free trial or that the Prime free trial automatically renewed as a paying subscription.” This is because Wilcox’s survey purports to show that consumers are generally aware of paid subscriptions’ auto-renewal features. 

    The Court decided that the Free Trial Survey was relevant and admissible because it may aid the trier of fact in determining a fact in issue.

    Held

    The Court denied the Plaintiff FTC’s Rule 702 motion to exclude the testimony of Amazon’s expert, Ronald Wilcox.

    Key Takeaway:

    While the FTC identified a number of purported defects with the Cancellation Survey, precluding Wilcox from testifying about this survey is unwarranted. This evidence “is to be attacked by cross examination, contrary evidence, and attention to the burden of proof, not exclusion.” 

    Case Details:

    Case Caption: Federal Trade Commission V. Amazon.Com, Inc., Et Al.
    Docket Number: 2:23cv932
    Court Name: United States District Court, Washington Western
    Order Date: August 06, 2025