TLDR
- Amazon settles with FTC for $2.5B over deceptive Prime tactics, offering refunds.
- Amazon faces historic $2.5B FTC settlement, changing Prime sign-ups and cancellations.
- Amazon to pay $2.5B, refunding millions over Prime subscription manipulation.
- FTC fines Amazon $2.5B for deceptive Prime tactics, refunding up to $51 per person.
- Amazon agrees to $2.5B settlement, changing Prime practices and issuing refunds.
Amazon.com has agreed to pay a historic $2.5 billion settlement in response to allegations by the Federal Trade Commission (FTC). The settlement addresses claims that Amazon manipulated millions of consumers into enrolling in its Prime subscription without consent. It also covers allegations that the company made it excessively difficult for users to cancel their memberships. This agreement marks one of the largest penalties in the history of consumer protection law, following extensive investigations into Amazon’s practices.
Amazon Will Pay $1B Civil Penalty and $1.5B in Consumer Redress
The FTC’s settlement requires Amazon to pay $1 billion in civil penalties, the largest fine ever imposed for violating consumer protection rules. In addition, Amazon will refund $1.5 billion to consumers who were deceived by the company’s subscription tactics. These refunds will go to an estimated 35 million people who enrolled in Prime subscriptions between 2019 and 2025. Those eligible for the refunds can expect to receive up to $51 per person. The settlement ensures that those impacted by Amazon’s practices will receive financial restitution.
The FTC alleges that Amazon used deceptive tactics to prompt consumers into Prime subscriptions. Pop-up ads during checkout and hidden buttons that enrolled consumers in Prime without clear consent are at the center of the charges. The company also created an intentionally confusing and frustrating cancellation process that made it harder for users to opt out. Amazon’s internal documents revealed that executives were aware of these tactics and that they referred to them as “shady” and “unspoken cancer.” The settlement requires Amazon to change its practices to prevent such issues from recurring.
Changes to Prime Enrollment and Cancellation Practices
Amazon must implement significant changes to how it handles Prime memberships. The company is now required to offer clear and visible options for consumers to decline Prime during the enrollment process. Furthermore, it must include full disclosures about the terms of the subscription, such as costs and cancellation procedures. Amazon also cannot use misleading language like “No, I don’t want free shipping” during sign-up.
Amazon must ensure a straightforward cancellation process. Consumers will be able to cancel their Prime memberships using the same method they used to enroll, without encountering barriers. The company will also hire a third-party supervisor to monitor its compliance with the settlement’s terms. These changes are aimed at making the subscription process more transparent and accessible for consumers moving forward.
The settlement comes after Amazon’s legal battle with the FTC, which started in 2021. While Amazon did not admit to wrongdoing, the settlement allows the company to move forward. Amazon stated that it has already made several improvements to its enrollment and cancellation process in recent years. This settlement resolves the case without protracted litigation but imposes significant financial and operational penalties on the tech giant.
