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

Amazon has agreed to pay $2.5 billion to settle claims by the U.S. Federal Trade Commission that it tricked millions of people into enrolling in Prime and made it difficult to cancel. The proposed settlement, announced just days after a Seattle jury began hearing the government’s case, marks a decisive win for the FTC in its effort to curb deceptive subscription practices. Amazon said it has always followed the law and that the settlement will allow the company to move forward.

Under the terms, $1.5 billion will be used to refund customers who were duped into signing up for Prime. The FTC estimated that as many as 35 million Americans could be eligible for refunds, with amounts potentially totaling up to $51 per person. Amazon will automatically refund customers who used Prime benefits fewer than three times in the year after enrollment. Those who used it fewer than ten times over the course of a year are eligible but must file a claim.

As part of the settlement, Amazon will no longer be allowed to feature checkout prompts that push Prime at the point of sale and must provide an easy way for customers to cancel Prime. The agency said such practices violated consumer protection laws. FTC officials described the case as a major enforcement action against deceptive subscription tactics. The agency cited internal documents in which executives described the subscription business as a shady world and noted that subscription driving was viewed as a risky line of work.

Amazon spokesperson Mark Blafkin said the company had worked hard to make it clear and simple for customers to sign up or cancel Prime membership, and that the settlement allows the company to focus on innovating for customers. Amazon had already begun changing its practices while defending the lawsuit, which the FTC filed in 2023 under President Joe Biden. The move comes as the agency and its leadership, including chair Lina Khan and lead enforcer Andrew Ferguson, push to curb aggressive tech and retail tactics.

Reaction to the settlement was mixed. Critics argued that a monetary penalty alone does not address ongoing concerns about renewal prompts and easy cancellation. Nidhi Hegde, executive director of the American Economic Liberties Project, said the commission should reissue a rule requiring easy cancellation rather than settle for a patchwork remedy. The decision marks the FTC’s most significant civil penalty to date and could influence how other large platforms design and market subscription services. Analysts say the payout underscores the growing regulatory focus on consumer protection in the digital economy and may affect investors and competitors alike.

Taken together, the case highlights ongoing regulatory scrutiny of major online marketplaces and the tension between consumer protection and business model innovations in the digital economy.