Amazon to pay $2.5 billion to settle FTC allegations it duped customers into enrolling in Prime

SEATTLE — The Federal Trade Commission on Thursday announced a $2.5 billion settlement with Amazon over Prime subscription practices, alleging the company misled customers into signing up for Prime and made canceling their memberships unduly difficult. Amazon did not admit any wrongdoing as part of the agreement and said it would comply with the settlement terms.

Under the terms, Amazon will pay $1 billion in civil penalties—the largest fine in FTC history—plus $1.5 billion in refunds to consumers who were unintentionally enrolled in Prime or deterred from canceling their subscriptions, the agency said. Eligible Prime customers include those who enrolled via the company’s “Single Page Checkout” from June 23, 2019, to June 23, 2025. The FTC filed suit in U.S. District Court in Seattle about two years ago, alleging more than a decade of violations, including a violation of the Restore Online Shoppers’ Confidence Act. Amazon did not immediately respond to requests for comment.

Prime remains a central pillar of Amazon’s business. The service has more than 200 million members worldwide and generated significant revenue through subscription fees and related services. In its latest financial report, Amazon said subscription services earned more than $12 billion in net revenue in the most recent period, up about 12% from the year-ago quarter. The figure covers Prime fees, as well as other subscriptions such as music, e-books and digital media.

The FTC said Amazon’s practices went beyond ordinary marketing complaints. It argued that the company deliberately created barriers to purchasing items without a Prime membership, including checkout interfaces that did not clearly disclose Prime enrollment and, in some cases, buttons that finished a sale without clearly stating it would also enroll the customer in Prime. The agency added that, internally, Amazon referred to the enrollment-and-cancellation process as “Iliad,” a reference to the ancient epic about a long siege, and that the process often required customers to affirm their desire to cancel on three separate pages.

Amazon has defended its Prime program, saying it clearly explained Prime terms before charging customers and that canceling is straightforward by phone, online, or chat. The company has noted that occasional customer frustrations are inevitable for a popular program and that it has repeatedly updated its processes to improve clarity and ease of cancellation. In a trial brief filed last month, Amazon emphasized that Prime remains a voluntary subscription and that the vast majority of sign-ups are initiated with informed consent.

The FTC’s action traces back to an investigation that began around 2021 during the waning years of the Trump administration and culminated in the 2023 filing of the lawsuit under FTC Chair Lina Khan, a former antitrust scholar appointed by the Biden administration. In parallel, the agency has pursued broader antitrust scrutiny of large tech platforms, including actions against Amazon in other arenas. The Prime settlement, while separate from those broader actions, underscores regulatory attention on how large sellers structure checkout flows and manage recurring charges.

The settlement also arrives as Prime continues to be a major growth driver for Amazon. While the company has repeatedly highlighted that Prime’s value lies in a suite of benefits—from expedited shipping to media content—regulators have argued that the business model depends on consumer trust in straightforward pricing and cancellation options. The case illustrates how the government could seek redress when it views that trust as compromised, even if the company maintains that it did not commit intentional deception.

Looking ahead, analysts say the settlement may influence how Amazon designs checkout experiences and presents subscription offers across its services. It may also prompt closer scrutiny of other subscription practices across e-commerce platforms as regulators continue to monitor online commerce, data use, and consumer protection in a digitized marketplace. The resolution, while significant in monetary terms, leaves open questions about how aggressively regulators will pursue similar claims in the future and how other large platforms will adjust their customer interfaces in response.

The FTC described the penalty as a watershed moment in consumer protection enforcement, emphasizing that the money will flow back to affected consumers and that it serves as a broader warning to tech-enabled businesses about the boundaries of online marketing and subscription management. Amazon, meanwhile, will continue to expand Prime and other subscription services as part of its broader growth strategy, subject to ongoing regulatory oversight and potential future settlements or actions.