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Amazon agrees to $2.5 billion FTC settlement regarding ‘misleading’ Prime practices

Amazon agrees to $2.5 billion FTC settlement regarding ‘misleading’ Prime practices

Bitget-RWA2025/09/25 17:54
By:Bitget-RWA

Amazon has agreed to a $2.5 billion settlement with the Federal Trade Commission (FTC) following accusations that it misled customers into subscribing to Prime and made the cancellation process difficult.

According to the FTC, Amazon will pay a $1 billion civil fine and return $1.5 billion to roughly 35 million consumers who were affected by what the agency described as “misleading Prime sign-up tactics.” The company must also end its “illegal sign-up and cancellation practices.”

The lawsuit, initiated in June 2023 during the Biden administration, alleged that Amazon designed confusing and misleading interfaces that led people to enroll in Prime without realizing it. The FTC also claimed that Amazon made the cancellation process unnecessarily complicated for those wishing to end their subscriptions.

This agreement was reached just as Amazon and the FTC were starting their trial this week, which was set to be decided by a jury.

“Our investigation revealed that Amazon used advanced subscription traps to trick people into joining Prime, then made it extremely difficult for them to cancel,” FTC Chairman Andrew N. Ferguson stated in a press release. “With this action, we are returning billions to Americans and ensuring Amazon cannot repeat these actions.”

Under the settlement, Amazon must now provide a straightforward option for customers to decline Prime enrollment. The company is no longer allowed to use buttons such as “No, I don’t want free shipping.”

Amazon is also obligated to clearly state the subscription price during sign-up, including the billing schedule, whether the subscription renews automatically, and how to cancel. Additionally, the company must offer a simple cancellation method that matches the way customers originally subscribed.

“Amazon and our leadership have always complied with the law, and this agreement lets us move ahead and focus on creating new value for our customers,” Amazon said in a statement. “We strive to make joining or leaving Prime straightforward and transparent, and to deliver significant benefits to our millions of loyal Prime members worldwide. We will keep doing so and are excited for what’s ahead for Prime members.”

This is among the largest settlements the FTC has ever secured. In 2019, Facebook (now Meta) agreed to pay $5 billion to resolve allegations of privacy violations.

It should also be noted that Amazon is still facing another federal case, where the FTC alleges the company unlawfully suppressed competition to become a dominant retailer and one of the globe’s most valuable businesses.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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