Amazon to pay $2.5 billion to FTC over Prime subscription traps

Amazon has agreed to a $2.5 billion settlement with the Federal Trade Commission over charges that the company knowingly trapped customers into paying for Prime subscriptions. The FTC said the payment includes a $1 billion civil penalty and up to $1.5 billion in refunds to affected customers. Amazon also will cease unlawful enrollment and cancellation practices for Prime and implement changes to how customers enroll and cancel. The agency said as many as 35 million consumers were affected, with refunds available to claimants of up to $51 per person.

Under the settlement, Amazon will add a clearly labeled button on its website to decline Prime enrollment, replacing the current language of 'No, I don’t want Free Shipping.' It will also make it easier for existing customers to cancel Prime and submit to third-party audits to ensure compliance.

Two executives — Neil Lindsay and Jamil Ghani — must refrain from unlawful conduct under the terms of the deal. 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.' The agency said the settlement includes ongoing oversight and that Amazon will submit to third-party audits to verify compliance.

The FTC began examining Amazon during President Trump’s first term and filed suit in 2023 under then-chair Lina Khan. The $2.5 billion settlement is described by the FTC as the second-largest in the commission’s history.

The company said it does not admit wrongdoing as part of the deal and noted that the containment terms include the instruction to simplify cancellation and enrollment processes for Prime. The case was announced just days after the jury trial began in Washington federal court. The decision comes as part of a broader wave of FTC actions against major online platforms.

Amazon did not immediately respond to requests for comment.