Amazon reaches $2.5 billion FTC settlement over Prime subscription traps
Settlement includes refunds, penalties, and new safeguards on enrollment and cancellation as the FTC pushes back against deceptive subscriptions
Amazon has agreed to a $2.5 billion settlement with the Federal Trade Commission over allegations that it knowingly trapped customers into Prime subscriptions, the agency announced Thursday. The deal includes a $1 billion civil penalty and up to $1.5 billion in refunds to customers harmed by the conduct. Amazon will also end unlawful enrollment and cancellation practices for Prime and implement changes on its site to improve opt outs. About 35 million consumers were affected, and claimants can receive up to $51 each. Amazon did not admit wrongdoing as part of the settlement. The FTC described the agreement as a major step in curbing deceptive subscriptions that are hard to cancel.
This action followed a long FTC review that began during the Trump administration and culminated in a 2023 lawsuit against Amazon and three executives named in the case. The agency alleged that Amazon enrolled millions of customers into Prime without explicit consent and then made canceling difficult. As part of the settlement, Amazon will add a clear decline option on its sign-up page to stop Prime enrollment, replacing the current phrasing that implies opting in. The company will also ease cancellation for existing customers and undergo third-party audits to ensure compliance. The settlement was announced just three days after the jury trial began in Washington federal court.
Two executives named in the suit, Neil Lindsay and Jamil Ghani, must refrain from unlawful conduct under the terms of the agreement. The settlement also requires easier ways for customers to cancel and ongoing audits to verify compliance.
FTC chair Lina Khan described the settlement as a record-breaking win for consumers tired of deceptive subscriptions. The agency also noted that the $2.5 billion settlement is the second largest in FTC history.
Beyond this case, the FTC is pursuing other actions against large platforms including Meta and Ticketmaster over various issues. The Amazon matter fits into a broader push to curb deceptive online practices and protect consumers.
Amazon did not immediately respond to requests for comment.
