Amazon has reached a $2.5 billion settlement after the Federal Trade Commission alleged the company duped tens of millions of customers into signing up for its Prime program.
The FTC filed the lawsuit in 2023 under the Biden Administration, arguing that the mega corporation had tricked tens of millions of customers into enrolling in its Prime subscription program and deliberately made it exceedingly onerous to cancel it. Prime membership costs $14.99 per month or $139 per year and provides benefits, including free shipping, grocery delivery, access to streaming content, and exclusive deals.
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“The Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” FTC Chairman Andrew Ferguson said in a statement. “The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
But former Biden-era FTC commissioners have raised concerns about the FTC’s decision to settle rather than go to trial. The settlement comes a week after U.S. District Court Judge John Chun ruled in favor of the FTC that Amazon had violated U.S. consumer protection laws in collecting billing information from subscribers before fully disclosing the terms of the membership.
Amazon spokesperson Mark Blafkin said in a statement that Amazon and its executives “have always followed the law and this settlement allows us to move forward and focus on innovating for customers.”
The settlement also comes at a time when President Donald Trump has sought to remake the FTC after Biden-era FTC Chair Lina Khan led the agency in line with a sweeping antitrust enforcement agenda. Earlier this week, the Supreme Court sided with Trump, provisionally allowing him to fire Rebecca Slaughter, the last Democratic commissioner on the FTC. Trump in March had moved to fire Slaughter, as well as Alvaro Bedoya, who formally resigned but is continuing to challenge his firing in court. Since then, the FTC has mostly operated with three Republican members and no Democrats.
Here’s what to know.
Why did the FTC sue Amazon?
The FTC alleged in its lawsuit that Amazon had used “manipulative, coercive, or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically-renewing Prime subscriptions.” It also alleged that the company “knowingly complicated” the process to cancel Prime subscriptions.
“Like, you click the button that says ‘End Your Prime Membership’ and it does *not* end your Prime membership, but rather starts you on a 4-page, 6-click, 15-option cancellation journey that Amazon itself compared to that slim airport read, Homer’s Iliad,” Bedoya, who was a member of the FTC when it filed the lawsuit against Amazon, posted on X on Thursday.
Consumer Intelligence Research Partners, a third-party market research firm, estimates that 197 million U.S. Amazon customers had a Prime membership as of March.
The FTC also named three Amazon executives in the suit, alleging that the company’s leaders had knowingly “slowed, avoided, and even undid” changes that would make it easier for customers to cancel their memberships.
Chun had ruled last week that two of those executives, head of Amazon Prime Jamil Ghani and Senior Vice President of Amazon Health Services Neil Lindsay, would be individually liable if a jury sided with the FTC.
What does the settlement mean for consumers?
Amazon will pay a $1 billion civil penalty to the FTC and refund $1.5 billion to roughly 35 million customers who had been affected by “unwanted Prime enrollment or deferred cancellation,” per the terms of the settlement. It’s the highest civil penalty in a case involving an FTC rule violation and the second-largest restitution award obtained by the FTC, the agency said.
Amazon will return up to $51 to eligible U.S. consumers over the last six years (from June 23, 2019, to June 23, 2025). This includes customers who signed up for Amazon Prime through a “challenged enrollment flow,” which refers to “any version of the Universal Prime Decision Page, the Shipping Option Select Page, Prime Video enrollment flow, or the Single Page Checkout.” That likely excludes customers who signed up directly via the Prime subscription site.
Eligible consumers also include customers who unsuccessfully attempted to cancel their subscription, either because they began the process but did not complete it, or because they took a “Save Offer” during the process.
Customers who used three or fewer Prime benefits in a 12-month period may receive an automatic payment within 90 days, according to the FTC. Other eligible customers will have the opportunity to make a claim through a form sent by Amazon. Customers will have up to 180 days to submit the claims form to Amazon through email, First-Class postage pre-paid mail, or the settlement website, per the agreement.The settlement also requires Amazon to make substantive changes to their Prime enrollment and cancellation processes by including a “clear and conspicuous” button for customers to decline membership, include clear disclosures about auto-renewal and the price of Prime during the sign-up process, and provide an easy way for customers to cancel their subscription.
Amazon and its executives did not admit any wrongdoing as part of the settlement, and the company said that it had already instituted many of the changes laid out by the FTC.
Amazon still faces another lawsuit brought by the FTC in 2023, which alleged that the company is an exploitative monopoly and illegally suppressed competition among online marketplaces. The company won partial dismissal of the lawsuit last year, although it is still scheduled to go to trial in early 2027.
Why are some former commissioners concerned about the settlement?
But not everyone sees the settlement as a win.
Khan, who led the agency in bringing the lawsuit against Amazon, suggested that the FTC had absolved the company of its full culpability by agreeing to settle.
“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,” Khan posted on X. The penalty makes up around 0.1% of Amazon’s nearly $2.4 trillion market cap.
“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. 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,” Khan continued.
She added in another post, “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.”
Bedoya also scrutinized the settlement agreement.
“So, to take a step back, the FTC was *winning* — the judge was agreeing with the FTC… and the FTC was about to start a trial where they would likely get *more* leverage and could air out the full allegations and evidence against Amazon in public. And then, today, the new FTC leadership announced a settlement,” he posted on X.
Bedoya said the agreement is effective for 10 years for the company and three years for the executives. “Based on my initial read, do the executives need to do anything separate from that? Do they pay any fines? Are they being demoted? Are they subject to extra monitoring? Do they need to admit any guilt whatsoever? The answers, as far as I can tell are no, no, no, no, and no,” Bedoya wrote.
Matthew Stoller, a researcher at the American Economic Liberties Project, pointed out that the settlement allowed Amazon to admit to no wrongdoing, even though, “A judge already ruled in summary judgment they violated the law.”
The FTC under the Trump Administration has shifted focus towards conservative issues, particularly after Trump’s firings in March. Although several of its commissioners, including Ferguson, have been skeptical of big tech, their criticisms have focused on companies’ regulations of speech. In recent months, the agency has warned Google that filtering Republican fundraising emails as spam could be a violation, investigated media watchdog Media Matters accused by Elon Musk of aiding advertiser boycotts of social media platform X, and held a workshop on the “dangers” of gender-affirming care for trans youth.
“We have to ask ourselves,” Bedoya said, “What pressure did the White House put on this FTC to enter into this settlement? What communications were there? This doesn’t smell right.”
