Amazon to pay historic $2.5 billion settlement for allegedly tricking customers into signing up for Prime

In a significant move, Amazon has agreed to a historic settlement of $2.5 billion with the Federal Trade Commission (FTC), marking the end of a two-year legal battle. The FTC announced this resolution on Thursday, following allegations that Amazon misled consumers into subscribing to its Prime service and created hurdles for those wishing to cancel. As part of the settlement, Amazon will pay a civil penalty of $1 billion and will refund approximately $1.5 billion to an estimated 35 million customers who were affected by what the FTC describes as deceptive enrollment practices. This agreement emerges just days into a trial related to the company’s cancellation policies, initiated under the Biden administration in 2023. FTC Chairman Andrew Ferguson highlighted the significance of this settlement, stating, "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." He emphasized that evidence indicated Amazon employed complex subscription tactics designed to lure consumers into Prime while complicating the cancellation process. In response to the settlement, Amazon has been instructed to eliminate its “No, I don’t want Free Shipping” button. The company is now required to provide clear and visible disclosures about Prime's terms during the enrollment process and ensure straightforward cancellation methods are available. Prime, a vital part of Amazon's business model, costs $14.99 monthly or $139 annually and has evolved from a simple fast delivery service into a comprehensive offering that includes streaming media, grocery delivery, and exclusive deals for subscribers. Despite the settlement, Amazon's stock remained stable following the announcement.