FTC Flip-Flops on Scant Resource Claim in Amazon Prime Case (3)

The US Federal Trade Commission quickly walked back comments that resource constraints at the agency will hamper its ability to start a trial in September challenging Amazon.com Inc.’s Prime subscription practices, following a hearing Wednesday morning.

Earlier Wednesday, FTC lawyer Jonathan Cohen told US District Court Judge John Chun in Seattle that “there is an extremely severe resource shortfall in terms of money and personnel.” He asked to delay the Sept. 22 trial date, citing shortages in staff due to voluntary resignations and current caps of $1 on charges on government credit cards.

Within hours of the hearing, Cohen submitted a letter to the court to “clarify” his comments at the hearing.

“I was wrong,” wrote Cohen, who has worked at the agency since 2002. “The Commission does not have resource constraints and we are fully prepared to litigate this case. Please be assured that the FTC will meet whatever schedule and deadlines the court sets.”

Cohen did not specify whether the FTC still plans to seek a delay of the trial.

On Wednesday evening, Trump’s new FTC chair Andrew Ferguson said that while the agency “is engaged in the streamlining process,” it has enough resources to aggressively pursue big tech companies. “I think a lawyer had a bad day in court. He was wrong,” Ferguson said during a live taping of the “Odd Lots podcast from Bloomberg,” which will air on Monday.

The delay request — and then the statement of readiness for trial — highlight the strain agencies across the government are facing under the Trump administration as it seeks to reduce federal staff and budgets. President Donald Trump appointed Elon Musk to oversee the effort to reduce spending and the chief executive officer of Tesla Inc. and SpaceX has publicly targeted $1 trillion in cuts in the next year.

The efforts by the Department of Government Efficiency, led by Musk, have resulted in some changes to the FTC — which laid off some probationary workers earlier this month. But Trump’s executive order establishing the group exempts law enforcement from some cuts.

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The FTC sued Amazon in 2023 alleging the e-commerce giant duped consumers into signing up for its Prime membership service and deliberately made it hard to cancel. The FTC said Amazon’s tactics violate a 2010 consumer protection law designed to protect online shoppers. At the hearing, Cohen said Amazon could face penalties of $1 billion or more.

During the hearing, Cohen was candid in describing the FTC’s resource issues, saying the agency may not be able to purchase the transcript from Wednesday’s hearing. The FTC has laid off some of its probationary workers and Cohen cited the limits placed on expenses as hampering agency staff.

Amazon has defended the Prime enrollment and cancellation processes, saying that the company gets consent from customers to enroll in the program and provides “simple mechanisms” to cancel Prime. John Hueston, a lawyer for Amazon, said any such constraints should not impact the case and urged Chun to keep the September date.

Read More: FTC Sues Amazon for Making It Difficult to Cancel Prime

Chun did not delay the trial at Wednesday’s hearing and instead asked the FTC to submit its request in writing with Amazon given a chance to respond.

When Chun asked what would change if the trial would be delayed by a few months, Cohen said it would reduce the immediate strain on the lawyers.

“I can’t guarantee that things won’t be even worse,” Cohen said, “but we may have been through the brunt of it. We’ll see.”

(An AI summary of this story was removed because it misidentified the party that would face potential penalties.)

(Updates with comments from FTC Chair Ferguson in sixth paragraph)

--With assistance from Leah Nylen and Sabrina Willmer.

To contact the reporter on this story:
Josh Sisco in San Francisco at jsisco6@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Elizabeth Wasserman, Peter Blumberg

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