Amazon has agreed to a substantial $2.5 billion settlement over allegations that it misled millions of consumers into subscribing to its popular Prime membership and then implemented tactics that made it frustratingly difficult for them to cancel their subscriptions.
This landmark agreement, announced on a Thursday, comes just days after a high-profile jury trial began in Seattle. The core of the case, initiated by the Federal Trade Commission in 2023, questioned Amazon’s integrity, challenging how the company, which boasts hundreds of millions of online shoppers, presented its Prime service.
The settlement package includes $1 billion in direct penalties and an additional $1.5 billion earmarked for customer reimbursements. Eligible customers could receive approximately $51 each, marking this as one of the largest settlements in the FTC’s history.
While Amazon settled without admitting or denying any wrongdoing, the company has yet to release an official statement regarding the agreement.
With an estimated 200 million Prime members in the United States, this program is a cornerstone of Amazon’s business, generating over $44 billion last year. Beyond the monthly fees, Prime’s true value lies in cultivating the company’s most loyal and frequent buyers.
Andrew Ferguson, the chairman of the FTC, has consistently voiced concerns about the dominance of major tech corporations, accusing them of suppressing free speech and stifling market competition. Under his leadership, the agency has pursued antitrust actions against giants like Amazon and Meta, and has initiated investigations into artificial intelligence firms regarding issues such as chatbot usage by children and investments in AI startups.
An FTC official commented during a press call, stating, “This outcome perfectly aligns with Chairman Ferguson’s primary objective for the agency: prioritizing the American consumer and ensuring they are fully compensated.”
As part of the settlement, Amazon is obligated to distribute $51 to qualifying customers within 90 days. Eligibility criteria include having signed up through the questioned process and showing minimal usage of Prime benefits, such as video streaming, after enrollment.
Furthermore, Amazon will inform other customers that they can file a claim if they believe they were unknowingly enrolled in Prime or were dissuaded from canceling by various offers presented during the cancellation process.
This story is still developing and will be updated as new information becomes available.