Amazon Settles FTC Allegations Over Prime Enrollment Practices for $2.5 Billion

Amazon has agreed to pay $2.5 billion to settle allegations by the Federal Trade Commission (FTC) that the company enrolled consumers in its Prime subscription service without their consent and made it challenging for them to cancel. The settlement includes a $1 billion civil penalty and $1.5 billion in refunds to approximately 35 million affected consumers.

The FTC's lawsuit, filed in June 2023, accused Amazon of using deceptive user interfaces to lead consumers into enrolling in Prime unknowingly and creating a complex cancellation process to deter them from ending their subscriptions.

FTC Chairman Andrew N. Ferguson stated, "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."

As part of the settlement, Amazon is required to implement clear and conspicuous disclosures about all material terms of Prime during the enrollment process, including the cost, billing dates, auto-renewal, and cancellation procedures. Additionally, the company must provide an easy way for consumers to cancel Prime using the same method they used to sign up.

In response, Amazon stated, "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."

This settlement is one of the largest in the FTC's history, following a $5 billion settlement with Facebook (now Meta) in 2019 for privacy violations.