Amazon has reached a settlement with the Federal Trade Commission (FTC), agreeing to pay $2.5 billion to resolve allegations that it misled millions of customers into subscribing to its Prime service and made the cancellation process unnecessarily complex. The settlement includes a $1 billion civil penalty and $1.5 billion in restitution for an estimated 35 million customers who were affected by what the FTC described as Amazon’s “deceptive” sign-up practices.
Under the agreement, Amazon will be required to halt its “unlawful enrollment and cancellation practices” concerning the Prime service. The FTC’s lawsuit, filed in 2023, accused Amazon of employing “dark patterns” to manipulate consumers into subscribing, while also making it exceedingly difficult to unsubscribe. The case was set to go to trial in Seattle, but the settlement has preempted the jury’s deliberations.
As part of the settlement terms, Amazon must revise its Prime sign-up process to include a “clear and conspicuous button” allowing customers to decline the subscription. Currently, customers are presented with options that can mislead them, such as a button stating “No, I don’t want Free Shipping,” which complicates the cancellation of Prime.
Additionally, Amazon must simplify the cancellation process for existing Prime members, ensuring it mirrors the sign-up steps. The FTC emphasized that the cancellation should not be “difficult, costly, or time-consuming.” Furthermore, Amazon is obliged to provide clear descriptions of Prime’s terms and conditions during the enrollment process, including details regarding costs, auto-renewal policies, and cancellation methods.
This settlement resolves one of the FTC’s legal actions against Amazon, but the agency is pursuing additional antitrust claims against the company. These allegations involve accusations that Amazon penalizes sellers who offer lower prices outside its platform. A trial for this separate lawsuit is anticipated to take place in 2027.
Andrew Ferguson, Chairman of the FTC, remarked on the settlement, stating, “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.”
This action by the FTC marks a significant step in regulating how online platforms manage subscription services and consumer rights, reflecting growing scrutiny over corporate practices in the digital marketplace.
