Amazon to Pay $2.5 Billion Settlement Over Misleading Prime Sign-Up Practices
Amazon has agreed to pay $2.5 billion to settle a lawsuit brought by the U.S. Federal Trade Commission (FTC), which accused the tech giant of tricking millions of customers into enrolling in its Prime membership program and making cancellations unnecessarily difficult.
Under the proposed agreement, $1.5 billion will be set aside for refunds to customers who were misled into signing up for Prime. The FTC described the settlement – reached just days after a trial began in Seattle – as the largest civil penalty in the agency’s history.
The case centered on Amazon’s alleged use of “subscription traps,” including pop-ups during checkout that pushed customers toward Prime enrollment without clear terms or consent. The FTC also highlighted Amazon’s one-month free trial offers, which automatically converted to paid subscriptions without properly informing customers.
FTC Chairman Andrew Ferguson said Amazon deliberately manipulated consumers.
“The evidence showed that Amazon used sophisticated designs to push people into Prime memberships and then made it extremely difficult to cancel,” Ferguson said. “This settlement puts billions of dollars back into Americans’ pockets and ensures these tactics end.”
According to the FTC, an estimated 35 million U.S. customers who were affected between June 2019 and June 2025 could receive refunds of up to $51 each. Customers who used Prime benefits fewer than three times in a year will be automatically refunded, while those who used it fewer than ten times must submit a claim.
As part of the settlement, Amazon must simplify its cancellation process and remove misleading language like “No, I don’t want free shipping” from its checkout pages.
Amazon, which did not admit wrongdoing, said in a statement that it had always complied with the law. Company spokesperson Mark Blafkin added, “This settlement allows us to move forward and focus on innovating for our customers.”
Prime, one of Amazon’s most lucrative services, offers free shipping, streaming, and other perks for $139 annually in the U.S. or £95 in the U.K. The program boasts hundreds of millions of subscribers globally.
The case is part of a broader push by U.S. regulators to hold tech companies accountable for misleading subscription practices. However, some critics argue that the FTC should have gone further by reinstating the recently overturned “Click-to-Cancel” rule, which would mandate easy subscription cancellations across all industries.
“Enough with this game of whack-a-mole,” said Nidhi Hegde of the American Economic Liberties Project. “If the FTC wants to stop deceptive subscriptions, it should re-issue the rule immediately.”
The settlement marks a significant moment for Amazon, which has already begun making changes to its Prime sign-up and cancellation processes while facing heightened regulatory scrutiny under both the Biden and Trump administrations.
