In a landmark litigation settlement, Amazon has agreed to pay $2.5 billion to resolve claims by the U.S. Federal Trade Commission (FTC), with millions of customers trying to register for key memberships and block cancellation efforts.
The deal, announced on September 27th, includes a $1.5 billion refund for affected consumers, making it the largest civil penalty the FTC has ever protected.
The settlement follows a trial in Seattle, with the FTC accusing Amazon of using manipulative tactics. For example, urging customers to urge Prime without clear disclosure of terms or a simple opt-out option. The agency also criticized Amazon’s one-month prime trial. This allowed users to automatically register for a paid subscription without any clear warnings. These practices are considered violations of the Consumer Protection Act, affecting an estimated 35 million U.S. customers between June 2019 and June 2025, with a qualifying refund of up to $51.
Amazon will not accept or deny groundbreaking litigation settlements
Amazon, which has not admitted or denied the claim, says it is “always following the law,” and sees it as an opportunity to “move forward.” We will refund customers who use Prime Merit less than three times a year without submitting a claim, but customers with up to 10 uses must apply. Amazon also needs to simplify the cancellation process and eliminate misleading prompts such as “No, I don’t want free shipping.”
FTC Chair Andrew Ferguson welcomed the settlement as a victory, ensuring it was “returned to the pockets of billions of dollars of Americans.” However, critics, including the American Economic Freedom Project, argue that the FTC should revive the “cancel from click” rule that collapsed earlier this year to further protect consumers from deceptive subscription practices.
Amazon had already adjusted several practices in a 2023 lawsuit filed under former FTC head Lina Khan. The settlement shows an ongoing scrutiny of the tech giant, but painfully slower, but both Kern and Ferguson advocate for increased consumer protection. So far, there has been no news on whether Amazon is facing a similar lawsuit in Europe or elsewhere in the world.
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