The FTC has settled a lawsuit against Amazon that will have the company pay a $1 billion civic penalty, give customers $1.5 billion in refunds, and change the signup and cancellation process for Prime memberships.
“The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription,” said FTC Chairman Andrew N. Ferguson in a statement Thursday. “Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
The FTC sued Amazon in 2023, alleging the online retailer of intentionally misleading consumers into signing up for Prime and making it hard to cancel. The FTC said that Amazon ” tricked and trapped” customers by making it difficult to check out without subscribing to Prime and created multiple unnecessary steps to unsubscribe.
Along with a monetary settlement, Amazon will have to update “unlawful practices and make meaningful changes to the Prime enrollment and cancellation.” That includes a button at checkout that clearly allows customers to make a purchase without starting a Prime membership and a simplified process for cancelling a Prime membership. Amazon will also have to offer clear disclosures about the terms of a Prime membership, including cost, frequency of charges, auto-renewal details, and how to cancel.
Update: Amazon has released a statement about the agreement.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years.”