Amazon has agreed to pay $2.5bn (£1.9bn) to settle a lawsuit by the US Federal Trade Commission (FTC), which accused the company of deceiving millions of customers into signing up for its Prime membership and making cancellation difficult.
Gatekeepers News reports that under the proposed deal announced this week, $1.5bn will go toward refunds for customers who were misled into enrolling. The agreement, reached just days after a jury trial began in Seattle, represents the largest civil penalty ever secured by the FTC.
Amazon did not admit wrongdoing. The company said it had “always followed the law” and that the settlement would allow it to “move forward.”
Prime, which costs $139 a year in the US and £95 in the UK, offers benefits such as free shipping and access to movies and music streaming. The FTC, however, accused Amazon of using “subscription traps” to pressure sign-ups — including repeated pop-ups at checkout, trial offers that failed to disclose automatic renewal, and confusing prompts that made declining unclear.
“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,” FTC Chairman Andrew Ferguson said. “Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
An estimated 35 million US customers affected between June 2019 and June 2025 may qualify for refunds of up to $51. According to the FTC, customers who used Prime fewer than three times in a year will be automatically refunded, while those who used it fewer than 10 times may file claims.
As part of the settlement, Amazon must simplify its cancellation process and stop using misleading buttons such as “No, I don’t want free shipping.” Internal company documents cited by the FTC showed employees acknowledged concerns, with one remarking that “subscription driving is a bit of a shady world.”
Amazon spokesperson Mark Blafkin said the company had already adjusted some of its practices and added: “We worked incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership. Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers.”
The case was originally filed in 2023 under then-FTC chair Lina Khan, a vocal critic of tech giants. Ferguson, appointed by President Donald Trump earlier this year, has also pledged aggressive oversight of major firms.
Still, critics said the settlement fell short of ensuring lasting reform. Nidhi Hegde, executive director of the American Economic Liberties Project, said: “Enough with this game of whack-a-mole. If the Commission is serious about protecting people from deceptive subscription schemes, it should re-issue the Click-to-Cancel rule today.”
