Amazon will pay $2.5 billion to settle allegations from the Federal Trade Commission that it misled customers into signing up for Prime and made canceling the service too difficult.
The deal comes just a few days into a federal trial in Seattle. The FTC had accused Amazon of using “deceptive” sign-up flows and cancellation hurdles to trap tens of millions of customers in unwanted subscriptions.
As part of the settlement, Amazon will pay a $1 billion civil penalty and refund $1.5 billion to about 35 million customers. Eligible members could receive up to $51 within the next 90 days, according to the FTC.
Amazon did not admit wrongdoing but said the changes outlined by regulators — including clearer disclosures and easier cancellation — had already been in place for several years.
FTC Chair Andrew Ferguson called the outcome a “monumental win” for consumers. “The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay,” he said in a statement.
Two senior executives, Prime head Jamil Ghani and Neil Lindsay, a vice president in Amazon’s health division who previously worked on Prime, are also barred from unlawful conduct under the agreement.
Prime, launched in 2005, has become one of Amazon’s biggest revenue engines, with more than 200 million members worldwide paying $139 a year for free shipping and streaming perks. Data shows Prime users spend more and shop more often than non-members.
The $2.5 billion penalty ranks among the largest in FTC history, though still far below the $5 billion fine imposed on Facebook in 2019 over privacy violations. For Amazon, the settlement amounts to about 0.1% of its $2.4 trillion market cap. Shares rose slightly after the news.
The company still faces a bigger fight ahead. In a separate lawsuit, the FTC and 17 state attorneys general allege Amazon illegally used monopoly power to inflate prices and stifle rivals. That case is expected to go to trial in 2027.
Source: CNBC