Amazon has reached a $2.5 billion settlement with the Federal Trade Commission over allegations that the tech giant enrolled millions of consumers in its Prime subscriptions without their consent and knowingly made it difficult for consumers to cancel.
The company will pay a $1 billion civil penalty and provide $1.5 billion in refunds back to consumers. The settlement also requires that Amazon make changes to its enrollment and cancellation practices, including:
- A clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, “No, I don’t want Free Shipping.”
- Clear and conspicuous disclosures about all material terms of Prime during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures.
- An easy way for consumers to cancel Prime, using the same method that consumers used to sign up
- Paying for an independent, third-party supervisor to monitor Amazon’s compliance with the consumer redress distribution process
The settlement comes after the FTC filed a lawsuit against Amazon in 2023, in which the regulator accused Amazon of violating the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) by creating confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge.
It also alleged that Amazon created a complex and difficult process for consumers seeking to cancel their Prime subscription, with the goal of preventing consumers from cancelling Prime.
Amazon documents discovered in the lead up to trial showed that Amazon executives and employees knowingly discussed these unlawful enrollment and cancellation issues, with comments like “subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer.”
In a statement obtained by TheWrap, Amazon spokesperson Mark Blafkin said, “Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years.”
The FTC estimates that 35 million consumers were impacted by Amazon’s alleged unwanted Prime enrollment or deferred cancellation and that the $2.5 billion figure is the second-highest restitution award ever obtained by FTC action. It also said the $1 billion civil penalty is the largest ever in a case involving an FTC rule violation.
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” FTC Chairman Andrew Ferguson said in a statement. “The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription. Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again. The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
The FTC filed the proposed order in the U.S. District Court for the Western District of Washington. The commission vote approving the stipulated final order was 3-0.
