Amazon has agreed to a record $2.5 billion settlement with the US Federal Trade Commission (FTC). With this settlement, Jeff Bezos‘ Amazon resolved a two-year legal battle over claims that it tricked customers into signing up for its Prime subscription and made cancellations deliberately difficult.
The settlement, announced Thursday, includes a $1 billion civil penalty and $1.5 billion in refunds to about 35 million consumers who were allegedly harmed by Amazon’s “deceptive Prime enrollment practices”.
FTC trial against Amazon
The deal was reached just days into the FTC’s trial against Amazon. The US agency filed a lawsuit against the company in 2023 under the Biden administration. However, the FTC’s investigation into Amazon’s subscription practices began during President Donald Trump’s first term.
Agency officials said the agreement represents the second-largest restitution ever achieved in an FTC action.
‘Sophisticated subscription traps’
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” FTC Chairman Andrew Ferguson said in a statement.
He added that evidence showed Amazon deployed “sophisticated subscription traps” to nudge customers into Prime while creating barriers to cancellation.
Amazon’s internal documents, uncovered ahead of the trial, revealed that company executives and staff had openly discussed the questionable tactics, Reuters reported. Some execs described “subscription driving” as “a bit of a shady world” and called the practice of steering customers into unwanted plans “an unspoken cancer”, the FTC said.