The Federal Trade Commission (FTC) announced a $2.5 billion settlement with Amazon.com Inc. on Thursday, resolving claims that the company tricked millions of consumers into signing up for its Prime service and complicated the cancellation process.
The agreement requires Amazon to pay a $1 billion civil penalty — the largest ever for violating an FTC rule — and provide $1.5 billion in refunds to affected consumers. It marks the second-highest restitution amount in FTC history.
The FTC alleged Amazon enrolled millions of consumers in Prime subscriptions without consent and deliberately complicated the cancellation process to prevent customers from ending their memberships.
“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 N. Ferguson in a statement.
Pattern of Deceptive Practices
The commission charged Amazon with violating the FTC Act and the Restore Online Shoppers’ Confidence Act through confusing user interfaces designed to trick consumers into Prime enrollment. Internal Amazon documents revealed executives and employees acknowledged these problematic practices.
According to the FTC, Amazon employees described their subscription tactics as operating in “a bit of a shady world” and referred to unwanted subscriptions as “an unspoken cancer.”
The civil penalty represents the largest ever imposed for an FTC rule violation. Consumer refunds will benefit an estimated 35 million people affected by unwanted Prime enrollment or delayed cancellations, making it the second-highest restitution award in FTC history.
Required Changes to Prime Service
The settlement mandates significant changes to Amazon’s Prime enrollment and cancellation processes. The company must now include clear decline buttons for Prime offers, replacing previous options that stated “No, I don’t want Free Shipping.”
Amazon must provide transparent disclosures about Prime’s material terms during enrollment, including costs, billing frequency, auto-renewal policies and cancellation procedures. The company must also create simplified cancellation methods using the same channels customers used to sign up.
The agreement requires Amazon to hire an independent third-party supervisor to monitor compliance with the consumer refund distribution process.
Enforcement Under New Leadership
The settlement represents the third case where the FTC has obtained civil penalties under the Restore Online Shoppers’ Confidence Act. The commission approved the stipulated final order by a 3-0 vote.
Chairman Ferguson emphasized the agency’s commitment to protecting consumers from subscription traps designed to manipulate enrollment while making cancellation extremely difficult.
The agreement prohibits Amazon from continuing its previous enrollment and cancellation practices while establishing clear standards for future Prime subscription offerings.
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