Amazon to pay $2.5 billion in FTC settlement over Prime enrollment practices

The Federal Trade Commission on Thursday announced a $2.5 billion settlement with Amazon.com over claims the e-commerce giant tricked customers into signing up for Prime memberships and made canceling difficult.

Under the agreement, Amazon will pay $1 billion in civil penalties—the largest FTC fine in the agency’s history—and another $1.5 billion in refunds to consumers who were unintentionally enrolled or deterred from canceling and who barely used Prime benefits such as streaming video or music. Claimants will have to show they enrolled unintentionally or faced obstacles to canceling and limited Prime usage, with the average payout estimated around $51. The payout must be generated within 90 days, and Amazon will notify customers that they can file a claim.

The two-year dispute culminated in a Seattle court two days after a courtroom showdown. The company did not admit wrongdoing as part of the settlement, and the case was filed two years earlier during the Biden administration.

As part of the agreement, Amazon will redesign its checkout flow to include conspicuous disclosures about Prime membership and will remove the yellow No, I don’t want Free Shipping button that appears before checkout. Prime costs $14.99 per month or $139 per year. In its most recent earnings call, Amazon reported more than $12 billion in subscription services revenue, contributing to roughly 12 percent growth in the latest quarter.

FTC officials described the settlement as a landmark move against deceptive subscription practices, saying the consent decree targets traps that pull consumers into ongoing payments. Andrew Ferguson, the agency’s chair, said the agreement represents a historic win for consumers tired of deceptive subscriptions that are difficult to cancel.