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The Federal Trade Commission (FTC) accused Amazon of using deceptive tactics to sign customers up for Prime subscriptions that were difficult to cancel.
Amazon has agreed to pay a settlement of $2.5 billion after the FTC alleged it had enrolled millions into Prime subscriptions without their consent and made them hard to cancel. The FTC filed an antitrust lawsuit against Amazon in June 2023, stating that the company manipulated customers into getting and keeping Prime subscriptions.
At the time, Amazon disputed the charges, saying its practices were aimed at protecting competition and improving customer experiences. However, investigators found documents indicating that Amazon executives and employees were aware of issues with the Prime enrollment and cancellation process.
Former Amazon user experience researcher Reid Nelson testified in court, calling the company’s tactics “misleading” and “confusing.”
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The FTC Chairman Andrew N. Ferguson stated, “Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
As part of the settlement agreement, Amazon will provide clear disclosures about Prime terms, costs, charges, and cancellation procedures. The company also agreed to create an easy way for consumers to cancel their Prime memberships.
Amazon admitted no wrongdoing but agreed to $1 billion in civil penalties and $1.5 billion in consumer relief for approximately 35 million impacted customers. Some eligible customers will automatically receive up to $51 in relief, while others must submit a claim.
“Amazon and our executives have always followed the law,” said Mark Blafkin, Amazon’s Senior Manager of Policy Communications. “We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our millions of loyal Prime members around the world.”
