Amazon Agrees to Record $2.5 Billion FTC Settlement Over Prime Practices
New York — Amazon will pay a record-breaking $2.5 billion settlement to the U.S. Federal Trade Commission (FTC), ending a two-year legal battle over allegations that the company tricked consumers into enrolling in its Prime subscription service and then made cancellations deliberately difficult.
The agreement, announced Thursday, includes a $1 billion civil penalty and $1.5 billion in refunds to an estimated 35 million customers affected by what regulators described as “deceptive Prime enrollment practices.” The FTC called it the largest civil penalty ever for a rule violation and its second-highest restitution award to date.
The settlement arrives just days into the trial of the FTC’s 2023 lawsuit against Amazon. FTC Chairman Andrew Ferguson hailed the outcome as a “monumental win” for consumers, saying the company deployed “sophisticated subscription traps” to manipulate signups and obstruct cancellations.
Amazon, however, denied wrongdoing. Company spokesperson Mark Blafkin said the company has “always followed the law” and stressed that Prime provides clear value to customers worldwide. The company noted it has already implemented changes, including eliminating misleading prompts like the “No, I don’t want Free Shipping” button and adding clearer disclosures and easier cancellation options.
Prime, priced at $14.99 per month or $139 per year, is one of Amazon’s biggest revenue drivers, generating $44 billion in 2024 alone, according to Emarketer. An estimated 197 million U.S. customers currently subscribe, highlighting Prime’s vast reach despite regulatory scrutiny.
Former FTC chair Lina Khan, who oversaw the filing of the lawsuit, criticized the settlement, saying it allowed Amazon to “pay its way out” of potentially being found liable. She argued that the fine is just a “drop in the bucket” for a company of Amazon’s size.
While the $2.5 billion payout represents only 5.6% of Prime’s annual revenue, analysts say the move could simplify subscription management and improve transparency. Still, it is unlikely to dent Amazon Prime’s dominance in the subscription market.
