Amazon will pay $2.5B to settle Prime 'subscription trap' lawsuit
What's the story
Amazon has agreed to a record settlement of $2.5 billion over a lawsuit regarding its Prime membership program. The US Federal Trade Commission (FTC) had accused the company of tricking users into signing up for the service without their consent and making it hard for them to cancel. The FTC said that $1.5 billion of this amount will be used in a fund to repay eligible subscribers who were affected by these practices.
Settlement details
Refunds for millions of Prime subscribers
Without admitting any wrongdoing, Amazon has agreed to pay $1 billion in government penalties and an additional $1.5 billion in payments to affected consumers. The company said that it has always followed the law, and this settlement allows them to focus on innovating for customers. Millions of Prime subscribers from mid-2019 through mid-2025 will automatically receive reimbursements of up to $51, while other users can submit claims for refunds based on their usage of Prime perks beyond free shipping.
Legal battle
FTC's lawsuit accused Amazon of using dark patterns
The FTC filed the lawsuit in 2023 against the popular Prime service, which generated over $44 billion in subscription revenue for Amazon last year. The federal suit accused Amazon of using "manipulative, coercive, or deceptive" designs to trick shoppers into auto-renewing Prime subscriptions. Regulators alleged that the company intentionally created a complicated cancelation process to dissuade people from quitting and had repeatedly backed off from simplifying this process as it led to fewer subscribers.
Ongoing litigation
Amazon also faces another federal antitrust lawsuit
Amazon has denied any wrongdoing throughout the court battle, arguing that its sign-up and cancelation processes were clear to most Prime users. The company also faces another larger federal lawsuit in which the FTC has accused it of being a monopoly. Amazon has called this allegation "wrong on the facts and on the law." This trial is scheduled for early 2027, with Judge John Chun of US District Court for Western District of Washington presiding over it.