Amazon has reached a settlement of $2.5 billion with the Federal Trade Commission (FTC) over allegations that it misled customers into subscribing to its Prime service while complicating the cancellation process. This agreement includes a civil penalty of $1 billion and $1.5 billion designated for refunds to approximately 35 million affected customers.
The FTC’s lawsuit, filed in 2023, accused Amazon of employing “dark patterns” to deceive consumers during the Prime sign-up process. According to FTC Chairman Andrew Ferguson, the evidence indicated that Amazon used sophisticated methods to manipulate customers into enrolling in Prime, making it difficult to terminate their subscriptions.
Under the terms of the settlement, Amazon is mandated to reform its Prime enrollment process. This includes implementing a “clear and conspicuous button” for customers wishing to decline a Prime subscription. Previously, customers faced misleading options such as a button labeled, “No, I don’t want Free Shipping,” which effectively pushed them toward subscribing.
Changes to Subscription Practices Required
Additionally, Amazon must simplify the cancellation process, ensuring that it mirrors the steps customers took to sign up. The FTC emphasized that the termination process should not be difficult, costly, or time-consuming. Customers will also receive clearer descriptions of Prime’s terms during enrollment, including information on costs, auto-renewal policies, and cancellation procedures.
This settlement resolves one of the FTC’s major legal actions against Amazon but does not conclude all legal challenges the company faces. The agency has also initiated an antitrust lawsuit against Amazon, alleging that it penalizes sellers who offer lower prices outside of its platform. This case is expected to go to trial in 2027.
The repercussions of this settlement echo broader concerns about consumer protection in the digital marketplace. The FTC’s actions reflect a growing scrutiny of tech giants, aiming to ensure fair practices in their business operations.
As the landscape of online commerce evolves, the implications of this case may influence how companies approach subscription models and customer interactions moving forward.