Amazon has agreed to pay a total of $2.5 billion to settle Federal Trade Commission (FTC) charges that it tricked millions of consumers into signing up for Prime subscriptions without their consent and deliberately made it difficult to cancel.
The settlement includes a $1 billion civil penalty (the largest ever in an FTC rule violation case) and $1.5 billion in refunds to affected consumers. It also requires Amazon to overhaul how it enrolls and allows users to cancel Prime subscriptions.
FTC Chairman Andrew Ferguson called the deal a “record-breaking, monumental win” for consumers, stating: “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.”
The FTC accused Amazon of violating both the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). According to the agency, the company used misleading user interfaces to nudge users into subscribing to Prime, sometimes without realizing it.
Internally, Amazon executives allegedly acknowledged the questionable tactics. FTC documents reveal that employees referred to the practices as “shady,” and one internal comment described them as “an unspoken cancer.”
The case also names two Amazon executives Senior Vice President Neil Lindsay and Vice President Jamil Ghani for their involvement in overseeing Prime and being aware of the practices.
Key Reforms Ordered in the Settlement
The FTC’s settlement requires Amazon to make significant, court-enforceable changes to its Prime program, including:
- A clear opt-out button: Amazon can no longer use misleading prompts like “No, I don’t want free shipping” to steer users toward Prime.
- Upfront disclosure of subscription terms: Consumers must be clearly informed about Prime’s cost, auto-renewal, billing frequency, and how to cancel.
- Simplified cancellation: Users must be able to cancel Prime using the same method they used to sign up, without jumping through hurdles.
- Independent oversight: Amazon must pay for a third-party supervisor to monitor compliance and ensure consumers receive refunds.
Chairman Ferguson added “we are putting billions of dollars back into Americans’ pockets and making sure Amazon never does this again. The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
The FTC’s order was unanimously approved in a 3-0 vote and filed in the U.S. District Court for the Western District of Washington.
The ruling marks only the third time the FTC has secured a civil penalty under ROSCA, and the $1.5 billion in consumer redress ranks as the second-largest restitution ever obtained by the agency.