Amazon will pay $2.5 billion to settle Federal Trade Commission allegations that it misled millions of consumers into signing up for Prime memberships and obstructed their ability to cancel, ending a two-year legal battle and one of the agency's most closely watched subscription cases.
The agreement, announced Thursday, includes a $1 billion civil penalty and $1.5 billion in refunds to roughly 35 million customers affected by "unwanted Prime enrollment or deferred cancellation," the FTC said. Each eligible customer is set to receive $51 within 90 days.
FTC Chairman Andrew Ferguson hailed the deal as a landmark enforcement victory. "Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel," Ferguson said. He added, "The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription."
The settlement arrived just three days into a Seattle federal trial that could have resulted in higher damages had a jury ruled against Amazon. Three senior executives-including Prime chief Jamil Ghani and Neil Lindsay, a senior vice president in the health division-were facing potential individual liability before the deal was struck.
Amazon admitted no wrongdoing but agreed to overhaul its Prime sign-up and cancellation flows. The company must provide "clear and conspicuous disclosures" about Prime terms during enrollment, obtain express consent before charging, and create an "easy way" to cancel subscriptions. The FTC also said Amazon may no longer use a "No, I don't want Free Shipping" button, which it alleged nudged users toward signing up for Prime.
Amazon spokesperson Mark Blafkin said, "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."
Prime remains a core revenue engine for Amazon, with membership fees of $14.99 per month or $139 annually. The program generated $44 billion in subscription revenue last year, according to Emarketer analyst Zak Stambor, who noted that the $2.5 billion payout represents about 5.6% of that total. "The settlement might streamline Prime's cancellation process, but it won't dent the program's dominance," Stambor said.
Amazon's stock traded slightly higher following the announcement, reflecting investor confidence that the settlement removed a legal overhang. The penalty is one of the largest ever imposed by the FTC, though it is far smaller than the agency's $5 billion privacy fine against Facebook in 2019.
