Amazon agrees to $2.5B FTC settlement over Prime subscription traps, with refunds and safeguards
Deal imposes new enrollment rules, refunds, and audits as the FTC extends its push against deceptive subscriptions
The Federal Trade Commission said Thursday that Amazon will pay a $2.5 billion settlement to resolve allegations that it knowingly trapped customers in Prime subscriptions. The agency said the deal includes a $1 billion civil penalty and about $1.5 billion in refunds to harmed customers. Amazon will also cease unlawful enrollment and cancellation practices for Prime. The FTC estimated that about 35 million consumers were affected, and eligible claimants could receive as much as $51 each. Amazon did not admit wrongdoing as part of the agreement.
As part of the settlement, two Amazon executives—Neil Lindsay and Jamil Ghani—must refrain from unlawful conduct. The company will add a clearly labeled button on its Prime enrollment page to decline signing up, replacing the current language that reads “No, I don’t want Free Shipping.” It will also make it easier for existing customers to cancel Prime memberships and submit to third-party audits to verify compliance. The FTC noted that the settlement was announced just three days after a jury trial began in a Washington federal court. The agency described the deal as the second-largest settlement in its history, underscoring the scale of the enforcement action in the subscription economy.
Background: The FTC began reviewing Amazon’s practices during President Donald Trump’s first term and filed suit in 2023 under then-chair Lina Khan. The agency alleged that Amazon enrolled millions of customers into costly Prime memberships without their consent and then purposefully made it difficult to cancel the accounts. The settlement resolves those claims without a court ruling against the company, but it imposes strict monitoring and substantial remedies intended to prevent a recurrence. In a separate note, the FTC has signaled that it will continue to pursue aggressive action against practices it views as deceptive in the digital marketplace.
Reaction and context: FTC Chair Andrew Ferguson described the settlement as a “record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel.” An Amazon spokesperson did not respond to requests for comment. The case comes as the FTC pursues a broader crackdown on dominant platforms and subscription traps, with contemporaneous actions against other tech companies and organizers. The agency’s effort to police subscription tactics aligns with broader antitrust and consumer-protection initiatives that have drawn increased scrutiny from lawmakers and the public alike.
Impact on consumers and the market: The $1 billion civil penalty and the $1.5 billion restitution pool are designed to compensate harmed customers and deter similar conduct. The refunds will be distributed to eligible Prime members who were enrolled without proper consent or who faced undue friction when attempting to cancel. The settlement also imposes ongoing oversight, including third-party audits, to ensure compliance over a multi-year period. The decision represents one of the largest monetary recoveries the FTC has secured in its history and signals the agency’s intent to pursue high-stakes cases in the consumer-subscription space.
The Amazon case is part of a broader wave of FTC activity in the tech and entertainment sectors, where the agency has signaled its willingness to pursue complex, large-dollar settlements. The agency has also taken recent steps that analysts view as part of a wider effort to curb perceived abuses by major platforms and ticketing platforms, even as some observers call for balancing enforcement with innovation. The settlement’s framework—clear opt-out mechanisms, easier cancellation, and third-party oversight—could become a benchmark for similar actions against other companies in the subscription economy.
