On Monday, the highly anticipated trial regarding the Federal Trade Commission's (FTC) lawsuit against Amazon commenced, which was expected to unfold over an extended period. However, by Thursday, Amazon swiftly reached a significant settlement of $2.5 billion concerning allegations of misleading practices related to its Amazon Prime subscription service. The FTC claimed that this settlement not only addresses the grievances of consumers but also reinforces the company's commitment to transparency.
According to the terms of the settlement, Amazon will allocate $1.5 billion into a fund designated for repaying eligible subscribers who were affected by the misleading practices. The remaining $1 billion will serve as a civil penalty. As part of the agreement, Amazon is mandated to implement a clear and conspicuous option that allows customers to decline the Prime subscription during the checkout process. Additionally, the company must simplify the cancellation procedure, making it more user-friendly for its customers.
Mark Blafkin, Amazon's senior manager, expressed, "Amazon and our executives have always followed the law, and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world."
This settlement announcement coincides with Amazon's preparations for its Prime Big Deal Days, a significant shopping event scheduled for early October. While Amazon continues to deny any wrongdoing, the company views this settlement as an opportunity to move past the legal issues and concentrate on enhancing the shopping experience for its customers.
The FTC's lawsuit against Amazon, filed in 2023, accused the retail giant of employing dark patterns—manipulative design strategies aimed at nudging consumers into signing up for Prime subscriptions and complicating the cancellation process. The FTC argued that these practices violated Section 5 of the FTC Act and the Restore Online Shoppers' Confidence Act. Specifically, the complaint highlighted that Amazon utilized deceptive user-interface designs to trick consumers into enrolling in automatically renewing Prime subscriptions.
Eligibility for the settlement payments is confined to customers who enrolled in Amazon Prime between June 23, 2019, and June 23, 2025. This includes customers who subscribed using the challenged enrollment flows or those who enrolled through any method but faced difficulties in canceling their memberships. The FTC identified several specific enrollment pages that were under scrutiny, such as the Prime Video enrollment, the Universal Prime Decision page, the Shipping Option Select page, and the Single Page Checkout.
To qualify for compensation, claimants must not have utilized more than 10 Amazon Prime benefits within any 12-month period. Customers who signed up through the challenged processes and did not use more than three Prime benefits within a year will receive automatic payments from Amazon within 90 days. Other eligible customers will need to file a claim, and Amazon is obligated to notify these individuals within 30 days of processing the automatic payments. Additionally, customers who did not use a challenged sign-up process but were unable to cancel their memberships will also need to file for payments.
The exact amount of the payments that eligible customers will receive remains to be determined, but the settlement aims to provide restitution to those who were misled into subscribing to Amazon Prime. With this significant settlement, Amazon seeks to rectify past grievances while reinforcing its dedication to customer satisfaction and compliance with consumer protection laws.
