Amazon has agreed to pay $2.5bn (£1.9bn) to settle allegations by US regulators that it misled millions of customers into signing up for its Prime membership and deliberately made cancellations difficult. The settlement marks the largest ever civil penalty secured by the Federal Trade Commission (FTC).
Record Penalty and Refunds for Customers
Under the proposed deal, $1.5bn will go directly to refunds for customers who were allegedly tricked into enrolling in Prime between June 2019 and June 2025. The FTC estimates around 35 million Americans may be eligible for compensation, with individual refunds of up to $51.
Amazon did not admit or deny wrongdoing but agreed to the settlement just days after a jury trial began in Seattle. The company has yet to comment on the outcome.
Allegations of Manipulative Design
The FTC accused Amazon of using “sophisticated subscription traps” during checkout, including pop-ups that repeatedly nudged customers to join Prime and made it unclear how to decline. It also criticised one-month free trials that automatically converted into paid memberships without clear disclosure.
FTC Chairman Andrew Ferguson said:
“Amazon used manipulative designs to push consumers into enrolling in Prime, and then made it exceedingly hard to end their subscription. Today, we are putting billions of dollars back into Americans’ pockets.”
New Rules for Prime Subscriptions
As part of the settlement, Amazon must change how it markets Prime. It can no longer use “dark patterns” such as buttons saying “No, I don’t want free shipping,” which pushed users toward signing up. It is also required to introduce a simple cancellation process.
Refunds will be issued automatically for customers who used Prime benefits fewer than three times in a year, while those who used them fewer than 10 times can apply for reimbursement.
A Blow to Amazon Amid Wider Scrutiny
Prime, which costs $139 annually in the US and £95 in the UK, is central to Amazon’s business model, offering free shipping and streaming services to hundreds of millions worldwide.
The case is a significant victory for the FTC, which has increasingly targeted big tech firms over consumer rights and competition issues. The charges were originally filed under former FTC chair Lina Khan, known for her tough stance on Amazon. Ferguson, appointed by President Donald Trump earlier this year, has continued that approach.
The FTC also revealed internal Amazon documents where staff described subscription practices as “a bit of a shady world,” suggesting the company was aware of potential risks.
