Amazon has reached a significant settlement with the Federal Trade Commission (FTC) amounting to $2.5 billion in response to allegations that the company entangled customers into unwanted Prime subscriptions. The FTC revealed the settlement, which includes a $1 billion civil penalty and a commitment to provide $1.5 billion in refunds to affected customers.
The settlement follows accusations that approximately 35 million consumers were negatively impacted by Amazon’s alleged practices. As part of the settlement agreement, customers with valid claims could receive up to $51 each. Importantly, Amazon did not admit to any wrongdoing in connection with these allegations.
FTC Chairman Andrew Ferguson hailed the settlement as a “record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel.” The resolution comes just days after a jury trial commenced in federal court in Washington, where the FTC had been building its case against Amazon.
Ferguson criticized Amazon’s practices, stating that the evidence indicated the company employed sophisticated methods to manipulate consumers into enrolling in Prime memberships, while also creating obstacles that made cancellation challenging. “Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again,” he asserted.
The investigation into Amazon’s subscription practices began during the Trump administration, with a formal lawsuit filed in 2023 under then-FTC Chair Lina Khan. Amazon and three of its executives were named as defendants in the case, which claimed that the company enrolled consumers into costly Prime memberships without their informed consent.
The settlement mandates Amazon to implement several changes, including the introduction of clearer language on its website that allows customers to decline Prime membership. The existing phrasing, which previously stated “No, I don’t want Free Shipping,” will be revised to more explicitly offer consumers an opt-out option.
Additionally, two of the named executives, Neil Lindsay and Jamil Ghani, are required to refrain from any unlawful conduct related to subscription practices. The settlement will also facilitate a more straightforward process for current customers to cancel their Prime accounts and requires Amazon to agree to third-party audits to ensure compliance.
This case represents one of several high-profile actions the FTC is pursuing, as it also works to address other significant corporate practices, including actions against Meta and Ticketmaster. The $2.5 billion settlement stands out as the second-largest in the agency’s history, underscoring the growing scrutiny of corporate practices in the subscription-based economy.
