In a striking turn of events, Amazon has agreed to shell out a hefty $2.5 billion to settle allegations from the Federal Trade Commission (FTC) that it used misleading tactics to entice customers into subscribing to its Prime service while subsequently complicating their attempts to unsubscribe.
The FTC’s announcement on September 25 revealed that the settlement includes a historic $1 billion in civil penalties, alongside $1.5 billion earmarked for refunds to approximately 35 million affected customers. This staggering figure is the largest financial penalty the agency has ever imposed. Each eligible customer could see a refund of up to $51, specifically those who signed up for Prime using Amazon’s “Single Page Checkout” mechanism from June 23, 2019, to June 23, 2025.
FTC Chairman Andrew Ferguson hailed the settlement as a considerable victory for consumers, asserting that it will restore billions to the pockets of everyday Americans while curtailing Amazon’s previously deceptive practices. He articulated the situation succinctly: “The evidence indicated that Amazon deployed intricate subscription traps designed to steer consumers into Prime, followed by an arduous process for those wanting to opt out.”
It’s notable that Amazon did not concede to any wrongdoing as part of this settlement, which came about in the shadow of an impending federal trial probing allegations of violations against the Restore Online Shoppers’ Confidence Act and other consumer protection guidelines.
The investigation into Amazon’s Prime enrollment strategies commenced back in 2021, during the first term of the Trump administration. The lawsuit that led to this federal trial was filed in 2023 under the leadership of former FTC Chair Lina Khan, who has been known for her assertive stance against big tech corporations.
At the heart of the allegations is the claim that Amazon employed manipulative design choices on its website to gain consent from millions of users without clarity and rendered subscriptions difficult to terminate. Internal documents cited by the FTC referred to the process as “Iliad,” drawing a cheeky parallel to the prolonged siege from the famous Greek epic, while employees described the subscription methods as residing in “a shady world” and an “unspoken cancer.”
While this settlement resolves the FTC’s case concerning misleading enrollment and termination practices, Amazon is not entirely off the hook. The company is facing additional scrutiny through a separate federal lawsuit, in collaboration with attorneys general from 17 states, accusing it of monopolistic behavior in the e-commerce landscape. The trial for those claims is slated for early 2027.
In a statement sent to The Epoch Times, Amazon spokesperson Mark Blafkin insisted that the company and its leaders have consistently adhered to legal regulations. “This settlement enables us to move forward and concentrate on innovation for our customers,” he reassured, emphasizing their commitment to transparency in subscription processes.
Amazon expressed that they believe they were in the right regarding this case, yet opted for settlement to divert focus toward business growth. As conditions of the settlement, Amazon must now provide a prominent option for customers wishing to decline Prime and ensure that all subscription terms are explicitly disclosed during enrollment. Additionally, customers must be able to terminate their subscriptions easily and at no cost, through the same method originally used for sign-up. A third-party monitor will oversee Amazon’s compliance with these new requirements.
Interestingly, Amazon claims that the revised requirements of the settlement are largely reflective of the sign-up and cancellation procedures that have been employed for years, suggesting it’s more of a formal recognition of practices already in place.
Since its inception in 2005, Amazon Prime has ballooned to over 200 million worldwide members. A subscription currently runs $139 annually or $14.99 monthly, granting services such as expedited shipping, video streaming, and discounts at Whole Foods. Notably, in their recent earnings report, Amazon announced over $12 billion in subscription revenue for the second quarter of 2025, which marks a 12 percent increase from the previous year.
Reuters contributed to this report.
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