(KRON/NEXSTAR) — Amazon has reached what the Federal Trade Commission (FTC) is calling a “historic” $2.5 billion settlement over allegations that the company used “deceptive methods” to enroll millions of customers in Prime subscriptions.
The company had also “knowingly made it difficult” for them to cancel, according to the FTC.
“Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again,” FTC Chairman Andrew N. Ferguson said of the settlement in a notice posted to the FTC website Thursday.
What does the settlement entail?
As a result of the settlement, Amazon will be required to change some of the interfaces and language used to promote Prime subscriptions. For example, in some cases, customers who had wanted to decline Prime were presented with a button reading “No, I don’t want Free Shipping.” The FTC says Amazon can no longer use that button.
The FTC further stipulated that customers, when signing up for Prime, must be presented with clear language outlining the cost, as well as information concerning any repeating charges or autorenewals that subscribers may be on the hook for.
Amazon has also agreed to pay a $1 billion civil penalty and provide $1.5 billion in refunds to customers harmed by “deceptive Prime enrollment practices,” the FTC said.
Who is eligible for a payout?
An estimated 35 million Amazon shoppers were reportedly impacted by the company’s deceptive practices, according to court documents filed by the FTC. Some of those customers will receive automatic payouts — capped at $51 apiece — if it’s determined they subscribed through a “challenged enrollment flow.” Eligible customers would also need to meet additional criteria concerning their sign-up date (between June 23, 2019, and June 23, 2025), their attempts to cancel, and how often they utilized their Prime benefits.
Amazon has agreed to notify eligible consumers of the settlement. The company is also creating a portal for other customers to file claims, court documents say, although no details have yet been provided regarding the filing process.
Former FTC leaders react
The settlement comes just as the case against Amazon was being brought to trial. But despite FTC Chair Ferguson touting the resolution as a history-making moment for “the Trump-Vance FTC,” former FTC Chair Lina Khan suggested on X that this turn of events made no sense.
“Inking this settlement a few days into the trial, after a series of wins for @FTC and once resources were already spent, raises real questions,” Khan said. She pointed to an argument put forth by former FTC Commissioner Alvaro Bedoya, who also suggested that the FTC could have succeeded at the trial, allowing them to hold Amazon accountable “air out the full allegations and evidence against Amazon in public.”
“This week marked the start of a historic jury trial, where American citizens would hear details of Amazon’s business practices and determine if it had broken the law,” Khan wrote in a separate post. “A couple of days into trial @FTC announces it has settled all charges, rescuing Amazon from likely being found liable for having violated the law and allowing it to pay its way out.
“A $2.5 billion fine is a drop in the bucket for Amazon and, no doubt, a big relief for the executives who knowingly harmed their customers,” she alleged.
The lawsuit was initially brought against Amazon in 2023, as part of a series of efforts under the Biden administration to protect consumers from unfair subscription practices. The FTC had also adopted a “click-to-cancel” rule in October 2024, which would have made it harder for companies to mislead e-commerce customers into memberships with autorenewal fees. But only days before it was scheduled to go into effect in July 2025, a U.S. appeals court vacated the rule, claiming the FTC hadn’t conducted a preliminary cost analysis.
