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Amazon has agreed to pay $2.5 billion to resolve a lawsuit alleging that it misunderstood the payment of its prime subscription, the Federal Trade Commission (FTC) announced Thursday.
The announcement took several days to court in between High-tech giant and FTC. Under the terms of the settlement, Amazon will need to pay a $1 billion civil penalty, provide consumers with a $1.5 billion refund, and suspend Prime’s illegal registration and cancellation practices.
The settlement figures are less than 1% of Amazon’s revenue last year.
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Amazon delivery truck in San Francisco. The company agrees to pay $2.5 billion to resolve a lawsuit that claims it used deceptive practices to register users with an Amazon Prime subscription. (David Paul Morris / via Bloomberg / Getty Images)
“Today, Trump Vance’s FTC has made history and secured a record-breaking monumental victory for millions of Americans tired of deceptive subscriptions that feel like cancellation is impossible,” said FTC Chairman Andrew N. Ferguson. “The evidence showed that Amazon used a sophisticated subscription trap designed to register consumers with Prime, making it extremely difficult for consumers to terminate their subscription.”
Sen. Elizabeth Warren, a long-time defender of consumer rights, criticized the settlement and said the Trump administration had not held Amazon responsible.
“It is said that Amazon has locked people up with their monthly subscriptions by tricking people into signing up for Prime and making it impossible for them to cancel,” Warren said in a statement. “The settlement has failed to hold Amazon executives accountable for their actions, and the fine is effectively a wrist slap. It’s less than 1% of Amazon’s revenue last year.”
“If the government doesn’t fight for actual accountability, huge companies like Amazon are dealing with fines for potentially illegal activities, and there’s a risk that they will treat them as an expense to do business and encourage future law violations that pay people,” she added.
LitigationSubmitted in 2023, Amazon now allows users to subscribe to Prime using what is called “dark patterns.”
| Ticker | safety | last | change | change % |
|---|---|---|---|---|
| amzn | Amazon.com Inc. | 218.36 | -1.85 |
-0.84% |
Dark patterns are design choices that customers see on-screen, and were intentionally created to mislead or trick them to make them take actions that they may not have been willing to do without fully understanding the outcome.
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FTC Chair Andrew Ferguson called the settlement a “record-breaking.” (/Getty Images)
Additionally, the company will make the process much easier for people.
In a statement, Amazon spokesman Mark Blafkin said the company and its executives “always follow the law, and with this settlement, we can focus on innovation for our customers.”
“We are working very hard to make it clear and simple that our customers sign up or cancel key memberships and provide significant value to millions of loyal key members around the world,” he added. “We continue to do so and look forward to what we have to offer to Prime members over the next few years.”
Amazon Delivery Man sorts packages in New York City vans. The company has agreed to pay $2.5 billion to resolve the lawsuit against its Amazon Prime subscription. (via Lindsey Nicholson/UCG/Universal Images group/Getty Images)
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Amazon is also facing another lawsuit from the FTC, where it has been accused of operating as a monopoly.
The trial is Major CasesIt is scheduled to start in 2027.
