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