Amazon has agreed to pay up to $2.5 billion to resolve allegations that it deceived tens of millions of customers into enrolling in its Prime membership program and then made it difficult for them to cancel their subscriptions.
The settlement, announced Thursday, comes just days after a jury trial began this week in Seattle regarding these claims, which originated from a 2023 lawsuit filed by the Federal Trade Commission (FTC).
The lawsuit directly challenges Amazon’s image as a champion for the hundreds of millions of consumers who regularly shop on its platform. While less sweeping than an ongoing antitrust case against Amazon, this suit targets how the company manages a critical subscription service that plays a central role in the lives of many of its customers.
An estimated 200 million U.S. consumers use Prime for their Amazon purchases. Prime subscriptions generated over $44 billion last year, but the program’s value to Amazon extends far beyond monthly fees. Prime members are the company’s most loyal shoppers, purchasing more frequently and in greater volume than non-members. Importantly, this settlement will not fundamentally alter Amazon’s engagement with these customers.
Josh Lowitz, a partner at Consumer Intelligence Research Partners who has surveyed Prime users for over a decade, noted, “Nobody welcomes a trial.” He added that while Prime remains highly popular, Amazon evidently decided that “paying $2.5 billion and resolving the issue before the holiday season was probably the best course.”
The settlement underscores the FTC’s ongoing efforts, led by a Republican majority, to hold major tech companies accountable despite previous attempts by executives to court political favor. Earlier this year, the agency’s two Democratic commissioners were removed, leaving three Republicans in control.
In 2023, then-FTC Chair Lina Khan filed a separate lawsuit accusing Amazon of pressuring third-party sellers and favoring its own services in ways that raised costs for consumers. That case remains active, with Amazon denying the allegations.
Regarding the Prime case, Amazon agreed to pay $1 billion in fines and an additional $1 billion to $1.5 billion in customer compensation. Eligible consumers may receive up to $51 each. The agency described this as one of the largest settlements in its history.
Amazon did not admit wrongdoing as part of the agreement.
“Amazon and its leadership have always complied with the law, and this settlement allows us to move forward and focus on innovating for our customers,” said Mark Blafkin, a company spokesperson.
He emphasized Amazon’s efforts to make Prime enrollment and cancellation clear and straightforward, adding that the company looks forward to enhancing Prime benefits in the coming years.
FTC Chair Andrew Ferguson has been vocal in criticizing major tech firms, accusing them of suppressing free expression and wielding power to stifle competition. His tenure has continued the antitrust litigation against Amazon and Meta initiated by previous commissioners and has expanded to investigate artificial intelligence companies, particularly concerning chatbot use by children and investments in AI startups.
Bill Kovacic, a former FTC chair, observed that Ferguson is especially focused on the influence that Amazon, Meta, Google, and others hold over free speech. He is leveraging the agency’s resources to enforce antitrust and consumer protection laws to curb the power of these platforms. Kovacic expects the FTC to persist in its regulatory efforts against tech giants.
“This is a significant outcome, demonstrating the Commission’s commitment to tackling serious fraud, especially by large technology companies,” Kovacic said.
Ferguson stated in an interview that the settlement exceeded initial expectations, securing $1.5 billion for consumers and $1 billion in civil penalties to ensure Amazon understands such conduct will not be tolerated.
The FTC’s case focused on the concept of “dark patterns,” website designs that deliberately steer customers toward subscriptions they do not want or make cancellation overly difficult.
For instance, it was documented that when customers aimed to purchase an item, Amazon displayed a prominent orange button labeled “Get FREE Same-Day Delivery,” which would enroll them in Prime. To avoid enrollment, users had to click a small text link stating, “No thanks, I don’t want FREE delivery.”
Amazon argued that such practices were standard in the industry. Under the settlement, this type of language is now explicitly prohibited, though Amazon may retain the enrollment and cancellation processes it has used for several years.
Negotiations between Amazon and the FTC had been ongoing for some time and continued even after the trial began. The first witness, a former Amazon employee, testified that the company was aware some customers enrolled in Prime unknowingly, according to sources familiar with the discussions who were not authorized to speak publicly.
The agreement will remain in effect for ten years. Two executives who have overseen Prime, Neil Lindsay and Jamil Ghani, have committed to personally uphold the settlement’s terms for three years.
Within 90 days, Amazon will provide $51 payments to customers who followed the enrollment process the FTC challenged. Eligibility requires meeting criteria such as having signed up between June 23, 2019, and June 23, 2025, and minimally using certain Prime benefits like streaming after enrollment.
Amazon will also notify other customers of their right to file claims if they believe they were enrolled in Prime without consent or were discouraged from canceling due to offers presented during the cancellation process. The total compensation paid will depend on the number of claims submitted.
Some technology policy experts argue the settlement may not be strong enough to deter similar behavior in the future.
“Ordinary people would face jail time for this kind of fraud, but Amazon and its executives can write a modest check to avoid court while keeping their jobs and reputations intact,” said Nidhi Hegde, executive director of the left-leaning American Economic Liberties Project.
Following the settlement filing in court, Judge John H. Chun excused the nine jurors and declared the trial concluded.
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