Amazon just agreed to pay $2.5 billion to settle Federal Trade Commission allegations that it deceived millions of customers into Prime subscriptions and made cancellation nearly impossible. The surprise settlement ended a high-stakes trial after just three days, delivering one of the largest regulatory penalties in FTC history and forcing major changes to how Amazon handles its 200-million-member subscription service.
Amazon just wrote one of the biggest regulatory settlement checks in tech history. The company agreed Thursday to pay $2.5 billion to resolve Federal Trade Commission allegations that it tricked millions of customers into Prime memberships and sabotaged their attempts to cancel.
The surprise settlement came as Amazon and the FTC were just three days into what was expected to be a month-long trial in Seattle federal court. Opening arguments had barely concluded on Tuesday when both sides apparently decided to cut a deal rather than roll the dice with a jury.
The numbers tell the story of just how seriously the FTC took this case. Amazon will pay a $1 billion civil penalty directly to the agency, while another $1.5 billion goes toward refunding an estimated 35 million customers who were allegedly hit by "unwanted Prime enrollment or deferred cancellation," according to the FTC's announcement.
But the financial hit might be the easy part for Amazon. The settlement forces the company to completely overhaul how it handles Prime sign-ups and cancellations. Amazon must now provide "clear and conspicuous disclosures" about Prime terms during enrollment and get explicit consent before charging anyone for a subscription. Most importantly for frustrated customers, the company has to offer an easy cancellation process - something the FTC alleged was deliberately complicated.
The case originated from a June 2023 lawsuit filed under the Biden administration, which claimed Amazon deceived "tens of millions" of customers through what regulators called "dark patterns" - design tricks that push users toward unwanted subscriptions. Three senior Amazon executives, including Prime boss Jamil Ghani and Neil Lindsay from the health division, were personally at risk of individual liability if the case had gone to trial.
FTC Chairman Andrew Ferguson, now leading the agency under the Trump administration, called it a "monumental win" and said the settlement shows "the Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay."