Amazon (NASDAQ: AMZN) has reached an agreement to resolve a landmark case brought by the U.S. Federal Trade Commission (FTC) over its Prime membership program, which the regulators claimed manipulated millions of users into enrolling without clear consent and made cancelling subscriptions difficult. The settlement requires Amazon to pay a total of $2.5 billion, consisting of $1 billion in civil penalties to the government and an additional $1.5 billion in refunds to affected consumers, without admitting any wrongdoing.
This largest-ever FTC fine in a case involving consumer subscription practices comes after a lawsuit filed by the agency in 2023 that accused Amazon of deceptive enrollment and cancellation policies. The dispute escalated into a jury trial in Seattle earlier this week, but the settlement was reached shortly after the trial began.
The FTC alleged that Amazon employed “dark patterns,” manipulative web designs intended to trick millions into subscribing to Prime without clear disclosure of costs and terms. Customers were said to face a complex and purposely obstructive cancellation process, requiring multiple confusing steps that discouraged or delayed subscription termination. Internal documents presented during the case reportedly showed executives acknowledging the questionable tactics, with comments referring to subscription driving as a “bit of a shady world” and unwanted enrollments as “an unspoken cancer.”
With more than 200 million Prime members in the United States, the subscription program is a major revenue source for Amazon, generating over $44 billion last year. Prime members also tend to shop more frequently and spend more on the platform than non-members, making them highly valuable to the company. According to the FTC, tens of millions of users were enrolled without explicit consent, and many abandoned the cancellation procedure midway due to its difficulty.
The settlement requires Amazon to overhaul its subscription flows moving forward. New rules will include clear and conspicuous options to decline Prime during checkout, transparent disclosures about all material terms such as costs and renewal policies, and an easy cancellation process accessible by the same methods users signed up with. Amazon is also mandated to pay for independent supervision to ensure compliance with these reforms.
Although Amazon has not admitted any legal violations, the outcome represents a significant victory for consumer protection advocates. FTC Chairman Andrew N. Ferguson emphasized that the settlement puts billions back into consumers’ pockets and ends what the agency described as “sophisticated subscription traps.”
This case is part of a wider crackdown by U.S. regulators on companies using manipulative subscription practices. The FTC has pursued similar actions against other firms, including Uber and LA Fitness, aiming to eliminate barriers that trap consumers in unwanted recurring payments.
Amazon’s cooperation in settling the lawsuit spares the company from a prolonged trial with possible further reputational damage. Still, the financial penalties and consumer compensation amount to a historic judgment reflecting increased regulatory scrutiny of subscription services.
For the millions of consumers who found themselves unknowingly locked into Prime memberships or frustrated by cancellation obstacles, this settlement is a rare instance of restitution. Eligible customers may receive refunds averaging about $51 each from the $1.5 billion consumer fund.
This legal chapter underscores the importance for companies to ensure clear communication and ethical practices in subscription-based offerings, particularly as such business models become increasingly prevalent. The full implications of this ruling will unfold as Amazon implements mandated changes and regulators monitor adherence to the new standards.
