Amazon has officially agreed to pay $2.5 billion to settle claims that it deceptively signed up tens of millions of users for its Prime membership program and then intentionally made it challenging for customers to cancel their subscriptions. This significant development was announced by the Federal Trade Commission on Thursday.
The settlement was reached swiftly, just days after a jury trial commenced in Seattle. The original lawsuit, filed by the F.T.C. in 2023, aimed to uncover the truth behind Amazon’s membership practices, directly challenging the company’s image as a champion for the hundreds of millions of consumers utilizing its online shopping services.
The total sum includes $1 billion in penalties and an additional $1.5 billion allocated for customer payouts, meaning eligible individuals could receive approximately $51 each. This settlement stands as one of the largest in the Federal Trade Commission’s history.
Despite agreeing to the settlement, Amazon has not admitted to any wrongdoing, according to the agency.
With an estimated 200 million individuals in the United States relying on Prime for their Amazon purchases, the subscription service, primarily Prime, generated over $44 billion last year. However, its strategic importance to Amazon extends far beyond mere monthly fees; Prime members are consistently identified as the company’s most valuable customers, purchasing more items and more frequently than non-subscribers.
This is a developing story, and updates will be provided as more information becomes available.