Amazon has agreed to pay $2.5 billion to resolve allegations from the Federal Trade Commission that it misled customers into signing up for Prime and made canceling difficult.
The settlement, reached just three days into the trial, includes $1 billion in penalties and $1.5 billion in customer refunds.
While Amazon did not admit to any wrongdoing, the company also agreed to end what the FTC called “unlawful enrollment and cancellation practices” tied to Prime memberships.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” spokesperson Mark Blafkin said in a statement to CX Dive. “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 case dates back to 2023, when the FTC under then-chair Lina Khan accused Amazon of using “manipulative, coercive, or deceptive user-interface designs” in its subscription process.
The suit continued under current chair Andrew Ferguson, who later scrapped the agency’s proposed “click to cancel” rule that would have required identical ease for joining and leaving subscriptions.
Industry experts said Amazon likely opted to settle early to avoid a larger financial hit. “Given how early this was in the trial, it suggests that Amazon suspected the case would’ve gone far worse for it financially if it let run through to the end,” said Judy Weader, principal analyst at Forrester told Retail Dive.
Amazon has since updated its cancellation process, with Forrester’s Weader noting the company was “already trying to comply with the spirit of the ‘click to cancel’ rule” before it was withdrawn.
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