SEATTLE — Amazon has reached a historic $2.5 billion settlement with the Federal Trade Commission, 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 $1 billion in civil penalties — the largest fine in FTC history, and $1.5 billion will be paid to consumers who were unintentionally enrolled in Prime, or were deterred from canceling their subscriptions, the agency said Thursday. Eligible Prime customers include those who may have signed up for a membership via the company’s “Single Page Checkout” between June 23, 2019 to June 23, 2025.
The Federal Trade Commission sued Amazon in U.S. 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’re being charged for online.
Amazon admitted no wrong-doing in the settlement. It did not immediately respond to requests by The Associated Press for comment Thursday.
Amazon Prime provides subscribers with perks that include faster shipping, video streaming and discounts at Whole Foods for a fee of $139 annually, or $14.99 a month.
It’s a key and growing part of Amazon’s business, with more than 200 million members. In its latest financial report, the company reported in July that it booked more than $12 billion in net revenue for subscription services, 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,” 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 enroll 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 canceling 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 Chair Lina Khan, an antitrust expert who had been appointed by 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.