Amazon agreed to settle the case, the FTC announced on Thursday, September 25. The settlement requires Amazon to pay a $1 billion civil penalty and return $1.5 billion to roughly 35 million consumers who were misled into enrolling in or stuck paying for Prime.
The settlement came just three days into a federal trial in Seattle, where Amazon and its executives faced accusations of deceptive practices, CNBC reported. The case was originally filed in June 2023 under the Biden administration.
The fine is one of the largest in FTC history. In 2019, the agency fined Facebook $5 billion for violating users' privacy.
The civil penalty is the largest ever tied to an FTC rule violation, while the restitution is the second-highest payout in the agency's history.
"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," said FTC chair Andrew Ferguson. "Today, we are putting billions of dollars back into Americans' pockets, and making sure Amazon never does this again."
The settlement marks only the third time the FTC has secured a civil penalty under the Restore Online Shoppers' Confidence Act (ROSCA). Amazon executives Neil Lindsay and Jamil Ghani were also named in the case.
Internal documents cited by the FTC revealed Amazon employees describing subscription tactics as "a bit of a shady world" and warning that unwanted sign-ups were "an unspoken cancer."
"The FTC alleged Amazon created confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge," the agency said. "Compounding these deceptive enrollment practices, Amazon also created a complex and difficult process for consumers seeking to cancel their Prime subscription, with the goal of preventing consumers from cancelling Prime."
The order also forces Amazon to overhaul its Prime enrollment and cancellation process. Consumers must now see a clear option to decline Prime, upfront disclosures on costs and auto-renewal, and a cancellation process that is just as simple as signing up for the service.
An independent supervisor will oversee compliance and refund distribution.
In a statement to CNBC, Amazon spokesperson Mark Blafkin said that Amazon and its executives "have always followed the law and this settlement allows us to move forward and focus on innovating for customers."
Launched in 2005, Prime has grown into one of the most profitable subscription services in the world with more than 200 million members globally. At $139 a year, Prime offers perks like free shipping and streaming, and data shows that members spend more than non-Prime shoppers.
Amazon still faces a separate antitrust lawsuit brought by the FTC and 17 states. The suit accuses the company of using monopoly power to inflate prices and shut out rivals.
While Amazon won a partial dismissal of the case in 2024, a trial is still set for 2027.
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