Amazon has reached a historic 2.5 billion dollar (£1.8 billion) settlement with the Federal Trade Commission (FTC), which said the online retail giant tricked customers into signing up for its Prime memberships and made it difficult for them to cancel after doing so.
The Seattle company will pay one billion dollars (£749 million) in civil penalties – the largest FTC fine in its history – and 1.5 billion dollars (£1.1 billion) will be paid to consumers who were unintentionally enrolled in Prime, or were deterred from cancelling their subscriptions, the agency said.
Eligible Prime customers include those who may have signed up for a membership via the company’s Single Page Checkout between June 23 2019 and June 23 2025.
The FTC sued Amazon in US District Court in Seattle two years ago alleging more than a decade of legal violations.
That included a violation of the Restore Online Shoppers’ Confidence Act, a 2010 law designed to ensure that people know what they are being charged for online.
Amazon admitted no wrongdoing in the settlement.
Amazon Prime provides subscribers with perks that include faster shipping, video streaming and discounts at Whole Foods for a fee of 139 dollars (£104) annually, or 14.99 dollars (£11.23) a month.
It is a key and growing part of Amazon’s business, with more than 200 million members.
In its latest quarterly report, the company in July reported more than 12 billion dollars (£9 billion) in net revenue for subscription services, which is a 12% increase from the same period last year.
That figure includes annual and monthly fees associated with Prime memberships, as well as other subscription services such as its music and e-books platforms.
The company has said that it clearly explains Prime’s terms before charging customers, and that it offers simple ways to cancel membership, including by phone, online and by online chat.
Occasional customer frustrations and mistakes are inevitable - especially for a program as popular as Amazon Prime
“Occasional customer frustrations and mistakes are inevitable – especially for a program as popular as Amazon Prime,” Amazon said in a trial brief filed last month.
But the FTC said Amazon deliberately made it difficult for customers to purchase an item without also subscribing to Prime.
In some cases, consumers were presented with a button to complete their transactions – which did not clearly state it would also enrol them in Prime, the agency said.
Getting out of a subscription was often too complicated, and Amazon leadership slowed or rejected changes that would have made cancelling easier, according to an FTC complaint.
Internally, Amazon called the process “Iliad”, a reference to the ancient Greek poem about the lengthy siege of Troy during the Trojan war.
The process requires the customer to affirm on three pages their desire to cancel membership.
The FTC began looking into Amazon’s Prime subscription practices in 2021 during the first Trump administration, but the lawsuit was filed in 2023 under former FTC chairwoman Lina Khan, an antitrust expert who had been appointed by Joe Biden.
The agency filed the case months before it submitted an antitrust lawsuit against the retail and technology company, accusing it of having monopolistic control over online markets.
