Amazon agrees to historic $2.5B settlement over deceptive Prime practices

Amazon Prime settlement overview:

• Who: The Federal Trade Commission (FTC) secured a $2.5 billion settlement with Amazon.
• Why: The FTC alleged Amazon used deceptive methods to enroll consumers in Prime subscriptions and made it difficult to cancel.
• Where: The settlement was filed in Washington federal court.

Amazon agreed to pay $2.5 billion to settle Federal Trade Commission allegations that the company enrolled millions of consumers in Prime subscriptions without their consent and made it difficult to cancel.

The Amazon Prime settlement includes a $1 billion civil penalty and $1.5 billion in refunds for consumers harmed by the deceptive Prime enrollment practices.

The FTC alleged Amazon used sophisticated subscription traps to manipulate consumers into enrolling in Prime and then made it difficult for consumers to end their subscriptions.

“Today, 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 Chair Andrew N. Ferguson said in a statement.

The FTC alleged Amazon and several executives knowingly misled millions of consumers into enrolling in Prime, violating the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).

Amazon allegedly created confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge. The company allegedly compounded these deceptive enrollment practices by creating a complex and difficult process for consumers seeking to cancel their Prime subscriptions.

Amazon documents discovered in the lead up to trial reportedly showed Amazon executives and employees knowingly discussed these unlawful enrollment and cancellation issues, with comments like “subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer.”

Amazon Prime settlement requires company to change enrollment practices

The Amazon Prime settlement includes the largest civil penalty ever in a case involving an FTC rule violation and the second-highest restitution award ever obtained by FTC action.

The settlement requires Amazon to stop its unlawful practices and make meaningful changes to the Prime enrollment and cancellation flows, including a clear and conspicuous button for customers to decline Prime.

Amazon must also include clear and conspicuous disclosures about all material terms of Prime during the enrollment process and create an easy way for consumers to cancel Prime.

Meanwhile, Amazon is facing a class action lawsuit alleging it misled customers about their ownership rights to digital content purchased on Prime Video.

What do you think about the Amazon Prime settlement? Join the discussion in the comments.

The FTC is represented by Jonathan Cohen, Evan Mendelson, Olivia Jerjian, Jonathan W. Ware, Sana Chaudhry, Anthony Saunders, Eli Freedman, Colin D.A. MacDonald, Rachel F. Sifuentes and Jeffrey Tang.

The Amazon Prime settlement is FTC v. Amazon.com Inc., et al., Case No. 2:23-cv-0932-JHC, in the U.S. District Court for the Western District of Washington.

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