Amazon on Thursday agreed to pay $2.5 billion to settle Federal Trade Commission allegations that it deceived tens of millions of consumers into enrolling in its Prime membership program and then made cancellation difficult. The settlement represents one of the largest in FTC history.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” Amazon spokesperson Mark Blafkin told Coins2Day. “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 agreement was reached just days into a jury trial that began this week in Seattle, stemming from a lawsuit the FTC filed in 2023, under then-chair Lina Khan. The case challenged Amazon’s subscription practices for Prime, which currently costs $139 annually or $14.99 monthly. Under the settlement terms, Amazon will pay a $1 billion civil penalty to the government and provide $1.5 billion in refunds to approximately 35 million affected customers. Eligible consumers could receive up to $51 each.
“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,” said FTC Chairman Andrew Ferguson. “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.”
The FTC accused Amazon of using “dark patterns”—manipulative user interface designs—to trick consumers into enrolling in automatically-renewing Prime subscriptions without their consent. The agency alleged Amazon made purchasing items without Prime more difficult and used confusing checkout processes where buttons to complete transactions didn’t clearly indicate they also enrolled customers in Prime.
Amazon also allegedly created a complex cancellation process internally dubbed “Iliad,” referencing Homer’s epic poem about the decade-long Trojan War. The process required customers to navigate multiple pages and options to cancel their subscriptions.
Internal Amazon documents revealed during the case showed executives discussing these practices, with employees calling unwanted subscriptions “an unspoken cancer” and describing “subscription driving” as “a bit of a shady world,” according to the FTC.
Amazon previously argued its designs and disclosures met or exceeded industry standards and that processes were clear to most customers. But a s part of the agreement, Amazon must eliminate buttons stating “No, I don’t want Free Shipping” and instead provide clear options for customers to decline Prime. The company must also offer transparent disclosures about Prime’s terms during enrollment and create simpler cancellation processes.
Prime memberships generate substantial revenue for Amazon, with subscriptions bringing in more than $44 billion last year. An estimated 200 million Americans use Prime for shopping on Amazon.
For this story, Coins2Day used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
