Amazon has reached an agreement to pay a staggering $2.5 billion to resolve allegations that it deceptively enrolled tens of millions of users into its Prime subscription service and subsequently created hurdles for those wishing to cancel. This major development was announced by the Federal Trade Commission on Thursday.
This substantial settlement arrives just days after a jury trial commenced in Seattle concerning these very issues. The case originated from a 2023 lawsuit initiated by the F.T.C., directly challenging Amazon’s public image as a consumer advocate, especially for the vast number of people relying on its online retail platform.
The total includes $1 billion designated for penalties and an additional $1.5 billion earmarked for customer reimbursements, potentially allowing eligible individuals to receive $51 each. According to the agency, this represents one of the most significant settlements ever reached in its history.
Despite agreeing to the settlement, Amazon has not admitted to any wrongdoing, a detail noted by the F.T.C.
It’s estimated that approximately 200 million individuals in the U.S. utilize Prime for their Amazon shopping. While subscriptions, predominantly Prime, generated over $44 billion last year, the program’s true value to Amazon extends well beyond these fees. Prime members are consistently Amazon’s most valuable customers, making more frequent and larger purchases compared to non-subscribers.
This is an ongoing investigation. Please check back for the latest developments.