Dark Patterns Just Became a $2.5 Billion Problem — Is Your Website’s Design Breaking the Law?

Website design choices that have quietly become industry-standard practice over the past decade are now sitting squarely in federal regulators’ crosshairs, and the size of the recent penalties suggests this is no longer a minor compliance footnote. The Federal Trade Commission secured a record $2.5 billion settlement against Amazon in September 2025 over deceptive Prime enrollment and cancellation design, Care.com separately paid $8 million after regulators alleged its cancellation flow “systematically deceived” users through what the agency explicitly labeled a “dark pattern,” and while the FTC’s dedicated federal Click-to-Cancel rule was struck down by an appeals court in mid-2025 on procedural grounds, the underlying legal exposure never actually went away — the same deceptive design practices remain fully enforceable through the FTC’s broader Section 5 authority and a growing list of state consumer protection laws. A business that assumed the rule’s reversal meant the risk disappeared has misread the situation entirely.

At Webtoz, building checkout and subscription flows that are both high-converting and genuinely compliant is a core part of custom web development, closely tied to the conversion thinking in 10 web design mistakes killing conversions.

This guide covers what actually happened in the Amazon and Care.com cases, which specific design patterns regulators are targeting, why the vacated federal rule didn’t end the legal risk, how state laws are filling the enforcement gap, what genuinely compliant design looks like, and a practical process for auditing your own site’s sign-up and cancellation flows.

1. The $2.5 Billion Amazon Settlement, Explained

The scale of this settlement is worth sitting with, because it represents the largest civil penalty ever secured in a case involving an FTC rule violation. The FTC’s lawsuit alleged Amazon used deceptive design methods to enroll consumers into recurring Prime subscriptions while deliberately making cancellation exceedingly difficult, requiring users to navigate a maze of confusing screens the agency’s own staff internally nicknamed the “Iliad Flow” — a reference to how long and convoluted the path to cancellation had become — and beyond the record $2.5 billion penalty, the court additionally ordered Amazon to make meaningful, structural changes to both its enrollment and cancellation interfaces going forward, not just pay a fine and continue the same design.

2. The Specific Design Patterns Regulators Are Targeting

Regulators have become considerably more specific about which exact UX patterns cross the line into deceptive design, drawing directly from the FTC’s own 2022 staff report on the topic. Enforcement actions have consistently cited requiring a phone call or live chat session to cancel a service that could be started with a single click online, forcing users through multiple confusing screens specifically designed to discourage completion, using emotionally manipulative “confirm-shaming” language like warnings about what a user will “lose” by canceling, pre-checked boxes that enroll users in additional charges or marketing without clear affirmative consent, and asymmetrical effort design where signing up takes seconds but canceling requires meaningfully more time and steps.

3. Why the Vacated Federal Rule Didn’t End the Risk

A meaningful amount of confusion has followed the Eighth Circuit’s decision to strike down the FTC’s dedicated Click-to-Cancel rule in mid-2025, and it’s worth being precise about what that ruling actually changed. The rule was vacated specifically on procedural grounds related to how the FTC promulgated it, not because the underlying conduct it targeted was found to be legal — the FTC retains full authority to pursue the exact same deceptive design practices under its long-standing Section 5 authority against unfair or deceptive acts and the Restore Online Shoppers’ Confidence Act, both of which predate the vacated rule entirely and remain fully in force, which is exactly the authority the agency used to secure the $2.5 billion Amazon settlement in the first place.

4. How State Laws Are Filling the Enforcement Gap

Beyond federal authority, a growing number of states have written dark pattern prohibitions directly into their own consumer protection and privacy statutes, adding another distinct layer of legal exposure. California’s Automatic Renewal Law specifically requires cancellation to be as easy as sign-up and has become an active enforcement tool independent of whatever happens federally, and several state privacy laws now expressly prohibit using dark patterns to obtain consumer consent for data collection or tracking — meaning a business operating nationally can face parallel exposure from state attorneys general even in a period where federal rulemaking has stalled, and “the federal rule got vacated” is a considerably weaker legal defense than it might initially sound.

5. This Applies to B2B, Not Just Consumer Sites

A common and costly assumption is that dark pattern enforcement only touches consumer-facing e-commerce and subscription services, leaving business-to-business software and service providers largely exempt from the same scrutiny. That assumption is genuinely incorrect — regulatory guidance and recent enforcement commentary have explicitly confirmed that businesses using deceptive design elements are facing scrutiny from the FTC and state regulators regardless of whether they operate business-to-consumer or business-to-business, meaning a SaaS company with a difficult-to-cancel enterprise subscription faces the same underlying legal exposure as a consumer subscription box service using the identical design tactics.

6. What Genuinely Compliant Design Actually Looks Like

The good news for any business genuinely willing to fix this is that compliant design isn’t especially complicated once the underlying principle is clear. The FTC’s consistent standard across every recent enforcement action is symmetry — cancellation needs to require roughly the same effort as sign-up, consent for any recurring charge or data collection needs to be a clear, separate, affirmative action rather than a bundled default, pricing and renewal terms need to be disclosed clearly before a user commits rather than buried in fine print discovered later, and language throughout the flow needs to be genuinely neutral rather than emotionally manipulative — a standard that, notably, tends to improve trust and long-term customer retention rather than undermining short-term conversion the way many businesses initially fear.

7. Common Mistakes

These mistakes recur across businesses that haven’t audited their sign-up and cancellation flows recently.

• Assuming the vacated federal rule ended the legal risk: Overlooking that Section 5 authority and state laws remain fully enforceable.
• Requiring a phone call or chat session to cancel an online sign-up: One of the most consistently cited patterns across recent enforcement actions.
• Assuming B2B products are exempt from scrutiny: Missing that regulators have explicitly confirmed business-to-business exposure too.
• Using pre-checked boxes for charges or marketing consent: Bundling consent instead of requiring a clear, separate, affirmative action.
• Treating this as a legal-only issue, not a design issue: Leaving the actual UX unchanged while hoping a privacy policy update covers the risk.
• Never auditing the full flow end-to-end: Reviewing sign-up design without walking through the actual cancellation experience firsthand.

8. Final Thoughts: Friction Is Now a Legal Liability

Design choices that used to be treated as an acceptable, even expected, way to reduce churn — a confusing cancellation flow, a pre-checked upsell, a guilt-tripping exit prompt — have moved decisively from a gray-area growth tactic to a documented, billion-dollar legal liability. With the FTC’s authority to pursue these patterns fully intact despite the vacated federal rule, and state laws increasingly filling in the same territory, businesses genuinely need to treat their sign-up and cancellation flows as a compliance surface, not just a conversion optimization one — the encouraging part is that the fix is usually a matter of removing friction rather than adding complexity, which tends to improve customer trust and retention right alongside reducing legal exposure.

Want your site’s checkout and subscription flows reviewed for dark pattern exposure? Explore our custom web development services, review our pricing, or contact us for a UX and compliance audit.