Amazon will pay $2.5 billion in a settlement with the Federal Trade Commission to settle claims that it misled millions of customers into signing up for its Prime membership.
The FTC said Thursday that Amazon will pay $1 billion in civil penalties, which marks the largest fine in FTC history, and $1.5 billion to customers who were unintentionally enrolled in an Amazon Prime membership or were deterred from canceling their memberships. The settlement stemmed from a 2023 lawsuit from the FTC, which said Amazon “duped millions of consumers” into enrolling in Prime by using “manipulative, coercive or deceptive” design tactics on its website.
In agreeing to settle, Amazon did not admit or deny wrongdoing. The company maintains it clearly lays out Prime’s terms and conditions before charging customers and offers simple ways to cancel.
“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 Chairman Andrew Ferguson said.
LOOMING TECH TRIALS TO SHOWCASE TRUMP ADMINISTRATION’S STANCE ON ANTITRUST
Under the agreement, within 90 days, Amazon will give $51 to customers who have undergone the sign-up process that the FTC challenged. To qualify, customers must fit certain criteria, including hardly using Prime benefits like video streaming after they were enrolled.
The settlement comes days into a jury trial in Seattle that began this week.
Amazon also agreed to notify other customers that they can submit a claim if they believe that they were unintentionally enrolled into a Prime membership, or if they wished to cancel but were enticed not to by offers during the cancellation process.
“Occasional customer frustrations and mistakes are inevitable — especially for a program as popular as Amazon Prime,” Amazon said in a trial brief filed last month.
The FTC maintained that Amazon has made it difficult for customers without Prime to purchase an item without purchasing Prime. The agency said that in some cases, customers were presented with an option to complete their transaction, but that button did not clearly state it would also enroll them in Prime. As a part of the settlement, Amazon must institute a clear button to allow customers to reject signing up for Prime when making other purchases.
The Washington Examiner sat down with new FTC Commissioner Mark Meador recently to discuss his antitrust policy vision, which can be distilled down into the adage that “big is bad.”
FTC COMMISSIONER MEADOR EMPHASIZES PROTECTING CHILDREN ONLINE AFTER PORN SETTLEMENT
While Democrats on the commission have largely been seen as skeptical of big business and Wall Street yet open to bigger government, Republicans typically fell in the other other end of the spectrum — distrusting big government while being more favorable to Wall Street.
Meador said he is working to break that mold. He sees both big government and big business as unhealthy for the country and for competition.
The FTC first began looking into Amazon’s Prime subscription practices in 2021 under the first Trump administration, but the lawsuit was filed in 2023 under former President Joe Biden’s FTC Chairwoman, Lina Khan.
