Amazon will pay a historic FTC settlement of $2.5 billion over Prime “subscription traps”
Amazon agrees to pay $2.5 billion to resolve an FTC action involving fraudulent Prime sign-ups, promising millions of customers refunds and simpler cancellation procedures.
Amazon has consented to pay $2.5 billion (£1.9 billion) to resolve claims made by the US government that it deceived millions of customers into becoming Prime members and purposefully made cancellations challenging. The agreement, which includes $1.5 billion in reimbursements, was praised by the Federal Trade Commission (FTC) as the biggest civil penalty in its history.
FTC Chairman Andrew Ferguson said in a statement Thursday that the evidence demonstrated Amazon had intentionally misled customers. Ferguson said, “Amazon created complex subscription traps to trick customers into signing up for Prime, then made it very difficult for customers to cancel their membership.” “Today, we are ensuring that Amazon never does this again and putting billions of dollars back into the pockets of Americans.”
The settlement covers activities from June 2019 to June 2025 and comes days after a jury trial in Seattle. Refunds of up to $51 may be available to over 35 million US consumers. Consumers can submit claims if they utilized Prime perks less than ten times in a year, while those who used them less than three times would receive an automatic reimbursement.
Amazon’s trial marketing and checkout styles were essential to the FTC’s lawsuit.
Investigators found that billing information was gathered without complete transparency, pop-ups continually forced users to sign up for Prime, and one-month trial offers did not explicitly indicate that they would automatically convert to paid subscriptions. The agency claimed that such actions violated consumer protection laws.
Amazon defended its actions in the settlement but did not acknowledge any wrongdoing.
The firm put “a lot of effort into making it clear and easy for customers to both sign up or cancel their Prime membership,” according to spokeswoman Mark Blafkin. “Amazon and our executives have always complied with the law, and this settlement enables us to proceed and concentrate on innovating for customers,” he continued.
Amazon must implement a simple cancellation process and remove manipulative button options like “No, I don’t want free shipping” as part of the agreement. Amazon executives themselves were reportedly concerned about scrutiny, according to internal communications made public in court. One employee even said that “subscription driving is a bit of a shady world.”
The case has wider ramifications for how digital titans are regulated. Under then-chair Lina Khan, who had long advocated for stricter enforcement of anti-monopolistic laws, the FTC brought its first lawsuit in 2023. Ferguson, President Donald Trump’s nominee to succeed her, has maintained an assertive posture, especially against subscription plans that detractors claim trap customers.
However, not everyone was happy with the result. Advocates for consumers contend that the deal falls short. Nidhi Hegde, executive director of the American Economic Liberties Project, remarked, “Enough with this whack-a-mole game.” “The Commission should reissue the Click-to-Cancel rule today if it is serious about safeguarding individuals against misleading subscription schemes.”
Prime, which costs $139 in the US or £95 in the UK, provides free shipping, video streaming, and other benefits. The FTC’s crackdown demonstrates how regulators are closely examining the fine print behind such digital services, which nevertheless have hundreds of millions of subscribers worldwide.
