Amazon has agreed to pay $2.5 billion to settle accusations that the e-commerce giant tricked millions of customers into subscribing to Prime and made it tough for them to cancel.
The settlement stems from a lawsuit that the Federal Trade Commission filed against Amazon in a U.S. District Court in Seattle in 2023. The agency, which protects consumers from unfair business practices, accused Amazon of duping people into automatically renewing their Amazon Prime subscriptions through “manipulative, coercive, or deceptive user-interface designs.” Amazon also made it complicated for people to end their membership, the lawsuit said.
A trial over the lawsuit, filed under the Biden administration, kicked off in Seattle this week. The settlement is among one of the largest FTC settlements and is another example of how the federal government has been trying to rein in the power wielded by Big Tech.
“Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again,” said FTC Chairman Andrew Ferguson in a statement. “The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
As part of the settlement, Amazon agreed to pay a $1-billion civil penalty and $1.5 billion to provide relief to roughly 35 million customers who were enrolled into Prime without their consent or had trouble canceling their subscriptions, according to a news release from the FTC.
Amazon didn’t admit guilt to the allegations by settling the lawsuit.
Mark Blafkin, an Amazon spokesperson, said in a statement that the company and its 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,” he said.
Amazon would also have to make design changes, under the settlement, including clearly providing a button to decline Prime instead of having customers click “No, I don’t want Free Shipping.” Consumers would also have a way to quickly cancel their Prime membership without it being “difficult, costly, or time-consuming.”
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