Amazon to Pay $2.5B to Settle Allegations it Tricked Customers to Enroll in Prime

The Federal Trade Commission on Thursday said it has reached a $2.5 billion settlement agreement with Amazon, where the federal agency said the online retailer signed up customers for Prime subscriptions without their consent and made it difficult for them to cancel later. 

The settlement will require Amazon to pay a $1 billion civil penalty and provide $1.5 billion in refunds back to consumers harmed by their deceptive Prime enrollment practices, and cease unlawful enrollment and cancellation practices for Prime, the FTC said.

“The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription," said FTC Chairman Andrew N. Ferguson in a statement. "Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again."

The FTC charged Amazon and several Amazon executives with knowingly misleading millions of consumers into enrolling in Prime, violating the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) in June 2023. The FTC alleged Amazon created confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge. Compounding these deceptive enrollment practices, Amazon also created a complex and difficult process for consumers seeking to cancel their Prime subscription, with the goal of preventing consumers from cancelling Prime, the agency said.

Documents discovered in the lead up to trial showed that 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,” the FTC said. 

The settlement requires Amazon to make changes to the Prime enrollment and cancellation flows by:

• including a clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, “No, I don’t want Free Shipping.”
• Including clear and conspicuous disclosures about all material terms of Prime during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures.
• creating an easy way for consumers to cancel Prime, using the same method that consumers used to sign up. The process cannot be difficult, costly, or time-consuming and must be available using the same method that consumers used to sign up; and
• paying for an independent, third-party supervisor to monitor Amazon’s compliance with the consumer redress distribution process.

"Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers," said Mark Blafkin, an Amazon spokesperson. "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. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years."

The settlement did not include an admission of guilt by the company or any executives, and it largely requires the company to maintain the sign-up and cancellation process that has been in place for several years, not to make additional changes, Amazon said.