Washington, D.C. — In a historic settlement, the Federal Trade Commission (FTC) has mandated that Amazon.com, Inc. pay $2.5 billion following allegations that the tech behemoth misleadingly enrolled millions of customers in Amazon Prime subscriptions while intentionally complicating the cancellation process.
This settlement marks one of the most significant consumer protection achievements in U.S. history, comprising a $1 billion civil penalty along with $1.5 billion allocated for consumer refunds, which will benefit approximately 35 million consumers.
Additionally, the FTC has come to agreements with two high-ranking Amazon executives: Neil Lindsay, Senior Vice President, and Jamil Ghani, Vice President. Both were mentioned in the complaint and will be held responsible for their involvement.
“Amazon used sophisticated subscription traps to manipulate consumers into signing up for Prime and then built barriers to stop them from canceling,” said FTC Chairman Andrew Ferguson. “This historic action puts billions back in Americans’ pockets and sends a message to corporate America: deception won’t be tolerated.”
The FTC charged Amazon with violations of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). According to the complaint, Amazon:
Key Allegations
- Designed misleading user interfaces that tricked consumers into unintentionally enrolling in Prime.
- Made cancellation confusing, time-consuming, and difficult, with the goal of reducing cancellations.
- Was internally aware of the issue, with Amazon staff reportedly referring to Prime enrollment tactics as “shady” and “an unspoken cancer.”
Terms of the Settlement
In addition to the monetary penalties, Amazon must:
- Clearly disclose Prime subscription terms during sign-up, including pricing, auto-renewal, and cancellation instructions.
- Provide a prominent “Decline Prime” button during the checkout process.
- Offer an easy cancellation method, using the same channel consumers used to sign up.
- Undergo independent monitoring to ensure compliance and proper refund distribution.
Amazon must now revamp how it markets and manages Prime subscriptions. Consumers eligible for refunds can expect further communication as the distribution process begins under third-party supervision. Consumers who believe they were misled or enrolled without consent can learn more or report additional concerns at ReportFraud.ftc.gov.
