Amazon will pay $2.5 billion to Prime subscribers

Sept 25: Amazon will pay $2.5 billion in fines and payments to Prime subscribers to settle a Federal Trade Commission case alleging the retail juggernaut signed users up for the subscription without their consent, the FTC said on Thursday.

Of that, $1.5 billion will go into a fund to repay eligible Prime subscribers and Amazon will not admit wrongdoing as part of the settlement, the FTC said.

Shares of Amazon were nearly unchanged after the news. Amazon didn’t immediately respond to a request for comment.

As part of the settlement, Amazon has agreed to create a “clear and conspicuous” button to allow customers to decline a Prime subscription, and to make it easier to cancel. Amazon has also agreed to more clearly disclose the terms of a subscription during the enrollment process and to pay for an independent, third-party supervisor to monitor compliance.

The settlement was announced just days into a trial in Seattle federal court where the FTC has aired its accusations against Amazon.

Amazon documents discovered in the lead up to trial showed Amazon executives and employees discussed illegal enrollment and cancellation issues, the FTC said, with comments like “subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer.”

The $1.5 billion fund will be available to an estimated 35 million consumers hit with unwanted Prime enrollment or deferred cancellation.

Amazon will pay up to $51 to individual Prime subscribers who submit valid claims and could make additional payments.

“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,” FTC Chairman Andrew Ferguson said.

The FTC started probing Amazon’s subscription practices during President Donald Trump’s first term and the case was filed during Joe Biden’s presidency.

The settlement is the second-largest restitution amount ever for an FTC action, agency officials said, and represents a major win for the FTC’s tough on tech agenda, which began during the first Trump administration.