Amazon agrees to $2.5 billion FTC settlement over Prime subscription practices
The deal imposes a civil penalty, refunds to consumers, and stronger enrollment and cancellation safeguards, with Amazon denying wrongdoing
Amazon on Thursday agreed to a $2.5 billion settlement with the Federal Trade Commission over allegations that it knowingly trapped customers into Prime memberships and made cancellations difficult. The agreement calls for a $1 billion civil penalty and up to $1.5 billion in refunds to affected customers, with the FTC saying about 35 million consumers were impacted by Prime enrollment practices. Amazon also promised to cease unlawful enrollment and cancellation tactics, among other concessions, and to make it easier for existing customers to cancel.
Under the terms of the settlement, refunds could total up to $51 per claimant, depending on the circumstances of each case. The FTC said the package is designed to return money to consumers and to prevent similar conduct in the future. The agency also requires Amazon to stop practices it deemed deceptive and to implement independent third-party audits to ensure ongoing compliance. In addition, two senior Amazon executives will be barred from engaging in unlawful conduct as part of the deal.
The company did not admit wrongdoing as part of the settlement. FTC Chair Andrew Ferguson described the accord as a “record-breaking, monumental win” for the millions of Americans who say deceptive subscriptions can be hard to cancel. He said the agreement will put billions of dollars back into consumers’ pockets and ensure Amazon cannot repeat these practices.
As part of the settlement, Amazon must add a plainly worded opt-out option on its Prime enrollment page, replacing the current language that some users described as opaque. The new button must clearly offer consumers the choice to decline signing up for Prime rather than steering them toward implicit enrollment. The FTC also ordered easier cancellation for existing Prime members and ongoing oversight through third-party audits to confirm the company’s compliance with the terms.
The case originated with the FTC’s investigation into Amazon’s Prime practices, which began during President Trump’s first term and culminated in a 2023 lawsuit brought under then-chair Lina Khan. The civil action proceeded into a jury trial in a Washington federal court, with the settlement announced shortly after the trial began. The agency framed the settlement as one of its largest ever and noted that the second-largest resolution in its history was reached in this matter.
The Amazon settlement comes amid broader FTC activity in a year of aggressive consumer-protection actions. The agency has pursued high-profile cases targeting large platforms for various practices, including scrutiny of Meta’s digital advertising and social-media business, as well as a lawsuit against Ticketmaster over concert-access fees and alleged bot activity. The $2.5 billion figure marks a milestone in FTC history, underscoring the agency’s emphasis on curbing perceived predatory subscription traps.
The resolution reflects a wider, ongoing effort to curb practices that can trap consumers in recurring charges or make cancellation disproportionately difficult. The settlement requires ongoing compliance reporting and periodic audits to ensure that Prime enrollments occur with clear consumer consent and that cancellations can be completed swiftly. If Amazon were to violate the terms again, the FTC has stipulated that additional penalties could be imposed and further action could follow.
As the market continues to digest the ruling, consumer advocates say the settlement could set a precedent for how major tech and e-commerce platforms design and manage subscription programs. Company executives and industry observers will be watching closely to determine how these changes affect Prime enrollment dynamics, e-commerce competition, and consumer choice in the rapidly evolving digital marketplace.
The FTC’s action and the accompanying reforms aim to restore consumer trust and provide clearer, more transparent pathways to cancel ongoing Prime memberships. The agency emphasized that the settlement seeks to prevent ambiguous enrollment processes and to safeguard consumer autonomy in subscription decisions. As part of the broader push to police digital markets, regulators will continue to monitor large platforms for similar practices and assess whether further measures are needed to protect consumers in an increasingly subscription-driven economy.
