Amazon has finalized a $2.5 billion agreement with the Federal Trade Commission (FTC) concerning accusations of “misleading” Prime membership registrations, as stated by the regulatory body. The FTC charged Amazon with breaching the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
As part of the settlement, Amazon will incur a $1 billion civil fine and issue $1.5 billion in reimbursements to around 35 million customers. If shared equally, each customer would obtain a refund of $42.86.
The FTC’s lawsuit asserted that Amazon employed misleading strategies to enroll individuals in its Prime membership service and made the cancellation process excessively challenging, likening it to a “Homeric odyssey.”
At the time of the settlement announcement, Amazon was in the third day of a jury trial in a Seattle federal court, where the jury might have imposed greater penalties or damages. In 2024, Amazon reported $638 billion in sales, achieving a net income of $59.2 billion, which may have influenced jury sentiment.
The lawsuit was launched during the Biden administration in 2023, yet FTC officials credited the Trump administration for the significant settlement.
FTC Chairman Andrew N. Ferguson remarked, “Today, the Trump-Vance FTC made history and achieved a record-breaking, monumental victory for the millions of Americans who are fed up with deceptive subscriptions that seem impossible to cancel. The evidence demonstrated that Amazon implemented sophisticated subscription traps designed to trick consumers into joining Prime, and then made it extremely difficult for them to terminate their subscription. Today, we are returning billions of dollars to Americans and ensuring Amazon never repeats this behavior.”
In addition to the settlement, Amazon consented to revise its Prime membership sign-up and cancellation procedures. The FTC noted that Amazon will incorporate “a clear and conspicuous button for customers to reject Prime” and remove options like “No, I don’t want Free Shipping.”
Amazon is also required to provide an uncomplicated way to cancel Prime memberships, which “must not be difficult, costly, or time-consuming and should be accessible using the same method that consumers used to enroll.” Moreover, Amazon agreed to fund an independent monitor to guarantee adherence to these commitments and the distribution of refunds.