Amazon has agreed to pay $2.5 billion to settle a lawsuit with the Federal Trade Commission over claims that it tricked millions of people into signing up for Prime, its paid subscription service, and made cancellation too difficult.
The FTC said $1.5 billion will go into a fund to repay eligible subscribers, with the remaining $1 billion as a civil penalty. The settlement requires Amazon to add a “clear and conspicuous” option to decline Prime during checkout and to simplify the cancellation process.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” Mark Blafkin, Amazon senior manager, said in a statement. “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.”
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The settlement brings an abrupt end to a trial that was just getting underway as Amazon gears up for its major fall shopping event, Prime Big Deal Days. The online retail giant continues to deny wrongdoing but said the agreement allows it to put the case behind it and prepare for the sale in early October.
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The FTC sued Amazon in 2023, accusing it of using “dark patterns” to nudge people into Prime subscriptions and then making it too hard to cancel. The FTC maintained Amazon was in violation of Section 5 of the FTC Act and the Restore Online Shoppers’ Confidence Act.
“Specifically, Amazon used manipulative, coercive or deceptive user-interface designs known as ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions,” the FTC complaint states.
The trial kicked off Monday when a jury in Seattle gathered for selection. It was expected to last about a month, with the FTC seeking fines, customer refunds and a ban on deceptive tactics. Instead, it ended with one of the largest consumer protection settlements in US history.
