Amazon to pay $2.5B for tricking customers into Prime memberships, FTC alleges

Amazon has agreed to a historic $2.5 billion settlement with the Federal Trade Commission after accusations that the company tricked customers into enrolling in its Prime memberships. 

The surprise settlement comes just days after the trial began in U.S. District Court in Seattle this week. 

Amazon’s FTC settlement

By the numbers:

The Seattle-based company will pay $1 billion in civil penalties — the largest fine in FTC history — and $1.5 billion to customers who were unintentionally enrolled in Prime, or were deterred from canceling their subscriptions, the FTC says. 

The backstory:

The FTC began looking into Amazon’s Prime subscription practices in 2021 during the first Trump administration, but the lawsuit was filed in 2023 under former FTC Chair Lina Khan, an antitrust expert who had been appointed by Biden.

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The FTC said Amazon deliberately made it difficult for customers to purchase an item without also subscribing to Prime. In some cases, consumers were presented with a button to complete their transactions — which did not clearly state it would also enroll them in Prime, the agency said.

Getting out of a subscription was often too complicated, and Amazon leadership slowed or rejected changes that would have made canceling easier, according to an FTC complaint.

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Internally, Amazon called the process "Iliad," a reference to the ancient Greek poem about the lengthy siege of Troy during the Trojan war. The process requires the customer to affirm on three pages their desire to cancel membership.

What they're saying:

"I think it just took a few days for them to see that they were going to lose. And they came to us and they paid out," said Chris Mufarrige, director of the Bureau of Consumer Protection, on the settlement negotiations.

The other side:

Amazon has admitted no wrongdoing in the case. 

"Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers," spokesman Mark Blafkin said in a statement. "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."

Changes at Amazon

Dig deeper:

As part of the settlement terms, Amazon is prohibited from misrepresenting the terms of the subscriptions. It must fully disclose the costs to be incurred and obtain the customer’s express consent for the charge. For example, it must have a clear option for customers to accept or decline a Prime subscription being offered during a purchase, avoiding potentially confusing language such as: "No thanks, I don’t want free shipping."

Automatic renewals for memberships must be clearly marked and the company is also required to use a cancellation process, which "must not be difficult, costly, confusing or time consuming," according to the settlement.

How to get a refund from the Amazon FTC settlement

What's next:

Certain Prime customers who are eligible for automatic refunds of up to $51 include those who may have signed up for a membership via the company’s "Single Page Checkout," among other links, between June 23, 2019, to June 23, 2025. Those customers will be reimbursed within 90 days of the settlement order.

Amazon is also on the hook to set up a claims process for more than 30 million customers who may have been affected by the other issues at the heart of the FTC case, including its cancellation process.