Amazon has agreed to pay $2.5 billion to resolve claims brought by the U.S. government that it tricked millions of people into signing up for Prime memberships and then made it difficult for them to cancel. According to a proposed settlement announced by the Federal Trade Commission (FTC), $1.5 billion of that amount will go to refunds for customers who were allegedly duped into signing up for the service. The deal, which came just days after a trial began, marks a major victory for the FTC and is the largest civil penalty the agency has ever secured. Amazon, which did not admit or deny the allegations, said it had “always followed the law” and that the settlement would allow the company to “move forward.”
The Allegations and Settlement Terms
The FTC targeted Amazon’s practices, such as pop-ups during the checkout process that repeatedly suggested customers sign up for Prime and its collection of billing information without fully disclosing the terms of the service or making it clear how to decline it. The agency also took aim at the company’s offer of one-month Prime trials, which did not clearly state that customers would be automatically enrolled at the end of the month. FTC Chairman Andrew Ferguson said that the evidence showed Amazon used “sophisticated subscription traps” and then made it “exceedingly hard” for consumers to end their subscriptions.
An estimated 35 million people in the U.S. who were affected by these practices between June 2019 and June 2025 could be eligible for refunds worth up to $51. As part of the settlement, Amazon agreed to automatically refund customers who used Prime benefits fewer than three times over a year after enrolling. Those who used it fewer than 10 times are eligible but must file a claim. The settlement also requires Amazon to create an easy way to cancel Prime and prohibits it from using buttons that say things like “No, I don’t want free shipping.”
A Mixed Reaction to the Settlement
The FTC pointed to internal documents in which Amazon executives and employees made comments like “subscription driving is a bit of a shady world,” suggesting the company was aware its practices might be questioned. After the settlement was announced, an Amazon spokesperson said the firm works “incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership.” While some critics, like Nidhi Hegde of the American Economic Liberties Project, welcomed the settlement, they also criticized the FTC for not pushing for a new rule requiring easy cancellation, a rule that was struck down by an appeals court earlier this year.
Author’s Opinion
This settlement is a significant warning to companies in the “subscription economy” that rely on deceptive practices to grow their user base. While the financial penalty is large, the greater impact is the public message it sends: that regulators are watching how companies acquire and retain customers, and that a “click-to-cancel” process may become the new standard. This case sets a clear precedent that deliberately confusing users and making it difficult to cancel a service will be met with legal action. It suggests a future where companies will have to prioritize genuine value and user experience over manipulative design, which is a necessary step towards a more ethical and transparent digital marketplace.
Featured image credit: Tim Reckmann via CCNull
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