Amazon has agreed to pay $ 2.5 billion to settle a lawsuit by the Federal Committee on Commerce (FTC) for claims that it is deceiving users to pay for primary subscriptions and found it difficult to cancel the entries.
The company will be obliged to pay a $ 1 billion civil penalty and provide $ 1.5 billion returns to about 35 million consumers who are damaged by the company’s “misleading practices”, the FTC says.
The suit, deposited in June 2023 under Biden’s administration, claimed that Amazon created confusion and misleading user interfaces to lead consumers to register with Prime without knowing. It also created a complex process for consumers who wish to cancel their subscription, making them go through unnecessary steps, according to the FTC.
The settlement comes as Amazon and the FTC had just begun the trial this week, during which a jury had to decide the outcome.
“The evidence showed that Amazon used sophisticated subscription traps designed to handle consumers to register with Prime and then made it extremely difficult for consumers to end their subscription,” FTC President Andrew N. Ferguson said in a press release. “Today, we put billions of dollars back to the American pockets and making sure it never does this Amazon again.”
As part of the settlement, Amazon is obliged to include a clean button to reduce customers to register for Prime. This means that the company can no longer have a button that says “no, I don’t want free shipping”.
Amazon must also clearly disclose the cost of subscription during the registration process, along with the billing date and frequency, whether it is automatic subscription, as well as the cancellation process. In addition, the company is obliged to create an easy way for consumers to cancel Prime, using the same method that consumers have used to register for the service.
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“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovation for customers,” Amazon said in a statement. “We are working incredibly hard to make it clear and simple for customers to sign or cancel their primary participation and provide real value for the many millions of loyal faithful members around the world.
The settlement is one of the largest in FTC history. In 2019, Facebook (now Meta) has reached a $ 5 billion settlement with the Organization to violate the privacy of consumers.
It is worth noting that Amazon is still facing another federal trial, in which the FTC accused the company of being illegally stifling the competition on its way to become an ubiquitous retail presence and one of the most valuable companies in the world.
