Amazon has agreed to pay $2.5 billion to settle with the Federal Trade Commission (FTC) over allegations the e-commerce giant misled customers into signing up for Prime subscriptions and made it difficult to cancel, the agency announced Thursday.
The company will pay a $1 billion fine, in addition to providing $1.5 billion in refunds. The settlement comes just as a trial was getting underway in Seattle.
“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,” FTC Chair Andrew Ferguson said in a statement.
“[W]e are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again,” he added.
As part of the agreement, Amazon is required to offer a “clear and conspicuous” option for customers to decline Prime, as well as clearly disclosing the terms of a subscription. The company also must create a new method for canceling that “cannot be difficult, costly, or time-consuming.”
Amazon spokesperson Mark Blafkin said in a statement Thursday 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 continued. “We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years.”
The Prime case is one of two lawsuits Amazon faces from the FTC, which has separately accused it of maintaining an illegal monopoly.
The two cases came just months apart. The agency sued the e-commerce giant over the Prime allegations in June 2023. It has accused the company of enrolling millions of customers in its subscription service without their knowledge or consent.
The FTC has also argued that Amazon required customers to traverse a complex cancellation flow referred to internally as “Iliad” to end their subscriptions, a process that often deterred cancellations.
Unlike other high-profile tech cases, the Prime lawsuit was set to go before a jury, which had been impaneled Monday. Arguments had already begun in the trial before Thursday’s settlement was announced.
Updated at 2:20 p.m. EDT