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Amazon has reached an agreement with the U.S. government, agreeing to pay $2.5 billion to settle allegations that the company deceptively enrolled millions of consumers in its Prime program and subsequently complicated the cancellation process.
According to the proposed settlement announced by the Federal Trade Commission (FTC), $1.5 billion of the total settlement will be allocated to refunding customers who were allegedly misled into subscribing to Prime.
The agreement was reached just days into a jury trial in Seattle, marking a significant victory for the FTC and resulting in the largest civil penalty ever obtained by the agency.
Amazon, while neither admitting nor denying the allegations, stated that it has “always followed the law” and that the settlement will allow the company to “move forward.”
Prime offers benefits such as free shipping and access to streaming content. The service boasts hundreds of millions of subscribers globally, with annual fees of $139 in the U.S. or monthly fees of $14.99, and £95 per year in the UK.
The FTC’s investigation focused on Amazon’s practices, including the use of pop-up advertisements during checkout that persistently encouraged customers to sign up for Prime, collecting billing details without fully disclosing the terms of the service, and obscuring the process for declining enrollment.
The agency also scrutinized Amazon’s one-month Prime trial offers, alleging that the automatic enrollment of customers at the end of the trial period was not clearly disclosed.
The FTC argued that these practices violated consumer protection laws.
“Evidence revealed that Amazon employed sophisticated subscription traps to manipulate consumers into Prime enrollment and subsequently made subscription termination exceedingly difficult,” stated FTC Chairman Andrew Ferguson.
“Today, we are returning billions of dollars to American consumers and ensuring that Amazon refrains from such practices in the future.”
The FTC estimates that approximately 35 million U.S. consumers affected by these practices between June 2019 and June 2025 may be eligible for refunds, potentially up to $51 per person.
Under the settlement terms, Amazon will automatically refund customers who utilized Prime benefits fewer than three times within a year of enrollment. Customers who used the benefits less than 10 times during the year are eligible for a refund but must file a claim.
As part of the agreement, Amazon will discontinue the use of buttons with phrasing such as “No, I don’t want free shipping” and is required to create a straightforward method for Prime cancellation.
The FTC indicated that Amazon was aware of potential concerns regarding its practices, citing internal documents containing comments from executives and employees suggesting that “subscription driving is a bit of a shady world.”
Following the settlement announcement, Amazon spokesperson Mark Blafkin asserted that the company has worked “incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership.”
“Amazon and our executives have always followed the law, and this settlement allows us to move forward and focus on innovating for customers,” he added.
Amazon had already implemented some changes to its practices while defending against the lawsuit, which the FTC initiated in 2023 under the Biden administration.
At that time, the agency was led by Lina Khan, who gained prominence for advocating stricter antitrust scrutiny of companies like Amazon.
Ferguson, appointed by President Donald Trump earlier this year, has also adopted a stringent approach toward tech companies.
However, some critics have voiced concerns about the settlement, arguing that the FTC should have continued pushing for a new rule mandating easy cancellation of subscriptions if it was truly committed to addressing unfair subscription practices.
The rule, initially implemented under the Biden administration, was subsequently struck down by an appeals court earlier this year.
“Enough with this game of whack-a-mole,” stated Nidhi Hegde, executive director of the American Economic Liberties Project, a group that has urged greater scrutiny of large corporations.
“If the Commission is serious about protecting people from deceptive subscription schemes, it should re-issue the Click-to-Cancel rule today.”
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