Amazon has agreed to pay $2.5 billion to settle allegations that the company enrolled millions of shoppers in Prime subscriptions without their consent, and intentionally made it difficult to cancel, the Federal Trade Commission announced Thursday.
Amazon will be required to pay a $1 billion civil penalty, provide $1.5 billion in refunds back to roughly 35 million customers harmed by the deceptive Prime enrollment practices -- up to $51 each to eligible customers -- and cease unlawful enrollment and cancellation practices for Prime, according to the FTC.
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"The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription," FTC Chairman Andrew N. Ferguson said in a statement. "Today, we are putting billions of dollars back into Americans' pockets, and making sure Amazon never does this again."
The FTC alleged Amazon created confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge. Compounding the practices, Amazon also created a complex and difficult process for consumers seeking to cancel their Prime subscription, with the goal of preventing consumers from canceling Prime, according to the lawsuit, first filed by the FTC in 2023.
Amazon documents discovered in the lead up to trial this week in Seattle showed that Amazon executives and employees knowingly discussed these unlawful enrollment and cancellation issues, with comments like "subscription driving is a bit of a shady world" and leading consumers to unwanted subscriptions is "an unspoken cancer," court papers show.
Amazon spokesperson Mark Blafkin said in a statement Thursday that the company and its executives "have always followed the law and this settlement allows us to move forward and focus on innovating for customers. 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 many millions of loyal Prime members around the world."
The FTC said the settlement requires Amazon to, among other things, stop its Prime subscription practices and revise the Prime enrollment and cancellation rules by including a clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, "No, I don't want Free Shipping," according to the agreement.
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