Amazon reaches $2.5 billion FTC settlement over Prime subscription traps

Amazon on Thursday agreed to a $2.5 billion settlement with the Federal Trade Commission over allegations that it knowingly trapped customers in Prime subscriptions. The deal includes a $1 billion civil penalty and up to $1.5 billion in refunds to affected customers, as well as changes to enrollment and cancellation practices and a requirement for independent audits. About 35 million consumers were affected, the FTC said. Amazon did not admit wrongdoing as part of the settlement.

The settlement was announced just three days after a jury trial began in a Washington federal court, according to the FTC. FTC officials said the agreement would end unlawful enrollment and cancellation tactics that kept Prime members locked into recurring charges. FTC Chair Andrew Ferguson described the settlement as a “record-breaking, monumental win” for consumers tired of deceptive subscriptions that feel impossible to cancel, though Amazon did not immediately respond to requests for comment.

The FTC’s complaint accused Amazon of enrolling millions of customers in Prime without their explicit consent and then making it extremely difficult to cancel the memberships. As part of the settlement, two of the company’s executives—Neil Lindsay and Jamil Ghani—must refrain from unlawful conduct. Amazon will be required to add a clearly labeled button on its website to decline signing up for Prime, rather than the existing language of “No, I don’t want Free Shipping.” The agency also said existing customers must have easier paths to cancel, and the settlement calls for third-party audits to verify compliance. The $2.5 billion price tag underscores the scale of the company’s alleged practices and positions the case among the FTC’s most significant actions in recent years. The agency noted that the second-largest settlement in its history was reached in connection with this matter.

The FTC began investigating Amazon’s practices during President Trump’s first term and filed suit in 2023 under then-chair Lina Khan, naming the company and three executives as defendants. The case sits within a broader wave of enforcement actions at the agency, which has pursued high-profile cases that touch the digital economy, including a separate lawsuit against Ticketmaster over concert fees and bot activity. The Amazon settlement also comes amid anti-deception efforts targeting subscription services, an area the FTC has signaled will receive continued scrutiny as e-commerce platforms grow more complex. The agency emphasized that the resolution does not involve an admission of wrongdoing by Amazon, and that the company will face ongoing oversight and independent audits as part of the terms.

The settlement marks a notable milestone for the FTC: it is among the largest financial penalties the agency has secured and reflects a broader push to curb practices that entrench consumers in digital services. Industry observers note the decision could influence how subscription programs are structured by other online retailers, potentially prompting updates to enrollment flows and cancellation workflows across the sector. While the financial penalties are substantial, the settlement also places a heavy emphasis on remedying consumer harms by restoring funds to customers and ensuring more transparent opt-out mechanisms in Prime’s sign-up process. The case continues to be a focal point in discussions about the FTC’s enforcement priorities as the agency expands its review of major platforms and subscription-based services.

In addition to the financial terms, the agreement requires ongoing oversight and periodic audits to verify compliance with the settlement’s provisions. The settlement’s timing—arriving shortly after the trial began—highlights the FTC’s intent to resolve key disputes without prolonged litigation while signaling to other companies that deceptive subscription practices will be pursued vigorously. The agency framed the deal as a broader guardrail against practices that make canceling subscriptions feel “impossible,” a message echoed by consumer advocates who have long argued that opaque enrollment flows erode consumer protections in the digital economy.

The implications of the decision extend beyond Prime. Analysts say the case strengthens the FTC’s capacity to police subscription traps and could influence how other large platforms structure their ongoing-service offerings. As regulators continue to scrutinize the intersection of marketing, billing, and user interface design, the Amazon settlement adds to a growing body of precedent emphasizing clarity, consent, and verifiable opt-outs in subscription services. The company’s stated commitment to implement user-friendly cancellation options and to subject its compliance to independent review will be watched closely by policymakers and consumer groups alike.

For Amazon, the agreement provides a path to resolve a high-profile dispute without a trial verdict that could have resulted in greater penalties or broader injunctions. The company faces the prospect of refunds to tens of millions of customers, while the $1 billion civil penalty and the possibility of additional costs tied to audits and compliance measures will factor into the company’s financial planning and investor communications in the near term. The FTC’s action—part of a broader set of regulatory initiatives—signals that scrutiny of major digital platforms is likely to remain a priority as enforcers seek to curb practices that hinder consumer choice and transparency in subscription services.