Amazon Settles FTC Allegations Over Prime Enrollment for $2.5 Billion

Amazon has agreed to pay $2.5 billion to settle allegations by the Federal Trade Commission (FTC) that it enrolled consumers into its Prime membership program without their consent and made the cancellation process challenging. The settlement includes a $1 billion civil penalty and $1.5 billion allocated for refunds to approximately 35 million affected customers. The FTC's complaint, filed in June 2023, accused Amazon of using deceptive user-interface designs, known as "dark patterns," to trick consumers into enrolling in automatically-renewing Prime subscriptions. The agency also alleged that Amazon's cancellation process was intentionally complex, deterring subscribers from successfully ending their memberships. As part of the agreement, Amazon is required to make clear disclosures about Prime's terms during enrollment, obtain express consent before charging for subscriptions, and provide an easy way for users to cancel their subscriptions. The settlement prohibits Amazon and two of its executives from engaging in unlawful conduct related to Prime enrollments and cancellations. Amazon did not admit to any wrongdoing as part of the settlement. The $2.5 billion fine is one of the largest ever imposed by the FTC, though it represents a small fraction of Amazon's market capitalization, which is close to $2.4 trillion. Amazon's stock price remained relatively unaffected following the announcement.