Amazon has agreed to a record-breaking $2.5 billion settlement with the Federal Trade Commission (FTC) after facing allegations of misleading millions of consumers into signing up for its Prime membership service and then making cancellations deliberately difficult.
The agreement, announced Thursday, September 25, brings an unexpected end to a two-year legal battle that had gone to trial just days earlier.
According to the FTC, Amazon will pay a $1 billion civil penalty and return $1.5 billion in refunds to more than 35 million Prime subscribers.
Officials noted that it is the largest civil penalty in FTC history involving a rule violation and the second-highest restitution ever secured by the agency.
FTC Chairman Andrew Ferguson praised the outcome, calling it a milestone.
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” he said.
Ferguson further explained that evidence revealed Amazon used “sophisticated subscription traps” to manipulate consumers into enrolling.
Despite the massive payout, Amazon has not admitted any wrongdoing.
In a statement, company spokesperson Mark Blafkin insisted, “We have always followed the law. The settlement allows us to move forward and focus on innovating for customers.”
He added that the company remains committed to making Prime enrollment and cancellation “clear and simple.”
However, critics remain unconvinced. Former FTC chair Lina Khan, who spearheaded the lawsuit in 2023, argued that the deal allowed Amazon to escape accountability.
She described the fine as “a drop in the bucket for Amazon,” pointing out that it amounts to just 5.6% of Prime’s $44 billion subscription revenue from last year.
The settlement will enforce immediate changes to how Amazon presents its Prime membership.
The company must remove the controversial “No, I don’t want Free Shipping” button, introduce “clear and conspicuous disclosures” about Prime’s terms, and provide simple cancellation options.
Prime, priced at $14.99 monthly or $139 annually, has become one of Amazon’s signature services, offering fast delivery, entertainment streaming, grocery discounts, and fuel perks.
With over 200 million global subscribers, any shift in its enrollment process could significantly impact consumer trust and corporate reputation.
