Amazon will pay a record $2.5 billion settlement to resolve a Federal Trade Commission lawsuit alleging the company used deceptive tactics to push customers into signing up for Prime and made the subscription difficult to cancel.
The settlement, announced Thursday, ends a two-year legal battle that began in 2023 under the Biden administration. The agreement requires Amazon to pay a $1 billion civil penalty and provide $1.5 billion in refunds to an estimated 35 million customers affected by its practices. The FTC described it as the largest civil penalty ever imposed for a rule violation and the second-highest restitution package in its history.
Prime, which costs $14.99 per month or $139 annually, is central to Amazon’s business. The service generated about $44 billion in revenue last year and has grown far beyond its origins in fast shipping to include streaming, grocery delivery, and exclusive deals. Third-party estimates place U.S. membership at roughly 197 million customers as of March 2025.
The FTC’s case focused on claims that Amazon used misleading “subscription traps” during enrollment and created obstacles for cancellation. Under the settlement, the company must provide clear disclosures about Prime’s terms and offer straightforward cancellation options. It is also prohibited from using confusing prompts such as the now-banned “No, I don’t want Free Shipping” button.
While Amazon did not admit wrongdoing, the company stated that it has already implemented the necessary changes to its enrollment and cancellation processes. Analysts noted that the payout represents just over 5% of Prime’s annual subscription revenue, a relatively small impact given the program’s dominance in the retail sector.
Source: CNN