Amazon to Pay $2.5 Billion to Settle Trickery Charges Related to Prime

Amazon has agreed to pay $2.5 billion to settle FTC allegations it tricked consumers into enrolling in Prime and then made it difficult for consumers to cancel their autorenewing memberships, resulting in billions of dollars in unwanted charges.

Under the settlement, Amazon will pay a $1 billion civil penalty – which the FTC says is the largest it has ever obtained for an FTC rule violation – and $1.5 billion in refunds to an estimated 35 million Prime members impacted by the company’s alleged deceptive membership practices.

Some eligible consumers will automatically receive a refund, while others will have to submit a claim. Payments are capped at $51 a person. Prime currently costs $14.99 a month or $139 a year.

The settlement also requires that Amazon make several changes to its checkout and cancellation processes. This includes providing consumers with an easy way to decline Prime – for example, Amazon must remove a button saying, “No, I don’t want Free Shipping.” In addition, Amazon must make it easy for consumers to cancel Prime, using the same method they used to sign up.

The FTC sued Amazon June 2023 alleging violations of the FTC Act and the Restore Online Shoppers’ Confidence Act, which, among other things, requires that memberships have “simple mechanisms” for cancellation.

The settlement comes just days before Amazon’s fall Prime Day event on Oct. 7-8 and as the company is facing a class-action lawsuit alleging it artificially inflates “list prices” to make Prime Day deals seem better than they actually are.

In response to a request for comment, an Amazon spokesperson referred to a statement on the company’s website stating that:

Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years

The company spokesperson did not respond to a question about the lawsuit alleging Amazon misleads consumers about the discounts on its Prime Day deals.

Subscription woes

Over the years, TINA.org has taken a number of actions to stop the deceptive marketing of autorenewing memberships and subscriptions.

TINA.org has investigated a multitude of subscription-based companies, filing complaints with the FTC (and others) against Savage X Fenty, Adore Me, FabKids, HelloFresh and, most recently, Homeaglow. In addition, TINA.org has filed a federal court brief and comments in support of the FTC’s efforts.

Find more of our coverage on subscriptions.