Earlier this week, Amazon reached a significant settlement with the Federal Trade Commission (FTC) to avoid a trial regarding allegations that the online retailer misled customers into signing up for Prime subscriptions and subsequently complicated the cancellation process. The settlement, which amounts to an impressive $2.5 billion, was announced by the FTC on September 25, marking it as the second-highest fine ever imposed on a company by the agency.
Out of the historic $2.5 billion settlement, $1.5 billion is earmarked for restitution that will be distributed directly to eligible Prime subscribers, with each payment capped at $51 per person. The remaining $1 billion will serve as civil penalties paid to the government. In addition to the financial penalties, Amazon has pledged to enhance its disclosure practices regarding Prime signups and to create a more straightforward cancellation process for its membership.
An Amazon spokesperson informed Tom's Guide that several of these improvements have been in place for years. It is also important to note that Amazon does not admit any wrongdoing as part of this settlement. The company expressed that resolving the case through settlement was preferable over enduring a prolonged trial.
The first wave of payments will automatically go to customers who signed up for Prime through a challenged enrollment flow and who have utilized no more than three Prime benefits—defined as perks exclusive to Prime members. Challenged enrollment flows include signups via the Universal Prime Decision Page, the Shipping Option Select Page, Prime Video enrollment flow, or the Single Page Checkout. Customers in this first wave will receive the full $51 payment without needing to submit a claim, and Amazon is expected to process these payments within 90 days.
For the second wave, claimants will need to fill out a form, but this will only be necessary after the automatic payment period concludes. This group includes customers who signed up through a challenged enrollment flow or faced difficulties canceling their memberships during the specified 2019 to 2025 period. Additionally, they must not have used more than ten Prime benefits within any 12-month subscription period. An attempt to cancel is defined as beginning the online cancellation process without completing it or accepting a Save Offer during the cancellation attempt.
Amazon is expected to send the claim forms to eligible customers within 30 days following the completion of the Wave 1 automatic payments. Once you receive the form, you will have 180 days to submit it back to Amazon via email, prepaid First-Class mail, or through the designated settlement website. Amazon will then have 30 days to review the claim and determine its eligibility for a refund, which is also capped at $51 per person.
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