Amazon to Refund Prime Customers as Part of $2.5 Billion FTC Agreement

‎Amazon has reached a $2.5 billion settlement with the Federal Trade Commission (FTC) to resolve allegations that the company used deceptive practices to enroll consumers into its Prime membership program and made cancellations difficult. The resolution marks one of the largest settlements in the history of the FTC.

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‎Amazon settles FTC lawsuit for $2.5B over deceptive Prime sign-up and cancellation tactics, affecting 35M consumers and reshaping subscription practices.

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‎The settlement includes a $1 billion civil penalty paid to the U.S. government and $1.5 billion in consumer refunds. Approximately 35 million affected Prime members may be eligible to receive up to $51 each. This agreement follows a lawsuit filed by the FTC in 2023 and comes just days into a jury trial in Seattle.

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‎FTC Chairman Andrew Ferguson stated that the case involved "sophisticated subscription traps" and cited internal evidence that Amazon intentionally designed a user experience to confuse customers. According to the FTC, the platform used "dark patterns," including misleading checkout interfaces and default enrollment mechanisms, to encourage automatic Prime sign-ups without clear consent.

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‎Amazon Prime, which currently costs $139 annually or $14.99 monthly, offers subscribers benefits such as free shipping and exclusive access to content. The FTC found that Amazon made purchasing without Prime less convenient and that checkout buttons often lacked clarity about the terms of membership.

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‎Internally, Amazon allegedly referred to its complex cancellation process as “Iliad,” suggesting a deliberate strategy to discourage cancellations. Documents revealed during the case showed that some employees considered the subscription tactics problematic, with one referring to them as "an unspoken cancer."

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‎Amazon has not admitted to wrongdoing but agreed to change several practices as part of the settlement. These include removing misleading buttons such as “No, I don’t want Free Shipping,” providing transparent enrollment terms, and streamlining the cancellation process.

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‎According to Amazon spokesperson Mark Blafkin, the company continues to believe its processes are lawful and customer-friendly. He emphasized that the settlement allows Amazon to move forward with its focus on delivering value to Prime members.

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‎Prime memberships continue to be a major source of revenue for Amazon, contributing over $44 billion in 2024. The service is used by more than 200 million people across the United States for shopping and entertainment.