FTC and Amazon Reach Historic $2.5B Settlement for Prime Subscription Controversy

FTC Reaches Landmark Settlement with Amazon Over Deceptive Prime Enrollment Practices

The Federal Trade Commission (FTC) announced a groundbreaking settlement with Amazon on Thursday regarding allegations that the tech giant enrolled millions of consumers into Prime memberships without their clear consent and made the cancellation process intentionally difficult.

As part of the deal, Amazon will pay a $1 billion civil penalty, the largest ever in an FTC case involving a rule violation, and provide $1.5 billion in refunds to consumers affected by deceptive Prime enrollment and cancellation practices.

FTC Chairman Andrew Ferguson stated, “The evidence showed that Amazon used sophisticated subscription traps to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription. Today, we are putting billions of dollars back into Americans’ pockets and ensuring that Amazon does not repeat these actions.”

The settlement is separate from the FTC’s larger antitrust suit against Amazon related to its role in online retail and marketplace services, which is still ongoing.

The FTC initiated the case following a 2023 complaint against Amazon. A federal judge in Seattle recently ruled that Amazon violated online shopper protection laws by collecting payment information before disclosing full Prime terms.

Amazon will be required to make significant changes to the Prime enrollment and cancellation processes and undergo independent compliance monitoring, according to the FTC.

Amazon, however, stated that the changes mentioned in the FTC press release are ones the company had already implemented in recent years. The tech giant emphasized its commitment to customer clarity and simplicity in enrolling or canceling Prime memberships.

Amazon did not admit wrongdoing under the settlement and argued that Prime’s terms were clear and cancellations were easily accessible.

FTC Allegations and Settlement Details

The FTC accused Amazon of using confusing checkout flows and deceptive user interfaces, known as “dark patterns,” to push shoppers into Prime sign-ups unexpectedly. Additionally, the FTC claimed Amazon had a complex cancellation process in place.

As part of the settlement, Amazon will redesign the Prime enrollment interface to include clearer disclosures and a prominent button to decline Prime without misleading options like “No, I don’t want Free Shipping.”

The FTC estimates that approximately 35 million consumers will be eligible for refunds as a result of the settlement.

About Amazon Prime Memberships

Amazon Prime memberships cost $139 per year or $15 per month and offer subscribers discounts on shipping, video and music streaming, and other benefits.

While Amazon does not disclose specific Prime membership figures, it was estimated that around 197 million Amazon customers had Prime memberships as of March 2025.

Subscription services revenue, including Prime memberships, totaled $12.2 billion in Amazon’s most recent quarter, accounting for approximately 7% of the company’s overall revenue.

Market Impact and Conclusion

Amazon’s shares saw a slight decline following the settlement announcement, with the company holding a market capitalization of nearly $2.4 trillion.

The settlement marks a significant development in the ongoing scrutiny of tech giants’ business practices, particularly in the realm of subscription services.

Editor’s note: Story updated with additional context from Amazon.