Amazon will pay $2.5 billion to settle FTC allegations that the e-commerce giant enrolled millions of customers in Prime subscriptions without consent and knowingly made it hard for them to cancel.
The FTC complaint against Amazon was originally filed in 2023 and today’s settlement order includes a $1 billion civil penalty, representing the largest-ever in a case involving an FTC rule violation, the commission said.
The remaining $1.5 billion will be paid back to consumers, providing relief for an estimated 35 million consumers impacted by Prime membership they didn’t want or for deferred cancellation.
In the FTC’s case, it charged Amazon and several executives with knowingly deceiving consumers – including by employing user interface designs known as “dark patterns” - into enrolling in automatically-renewing Prime subscriptions, in violation of the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
The FTC alleged the e-commerce giant “created confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge.”
On top of that, the allegations assert Amazon purposefully created a difficult process to end subscriptions with the aim of preventing consumers from canceling.
“The primary purpose of its Prime cancellation process was not to enable subscribers to cancel, but to stop them,” stated the FTC when it first brought the complaint two years ago. “Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line."
Thursday’s settlement announcement comes three days into a trial, which discovery in the lead up to unveiled documents that the FTC said showed Amazon executives and employees knowingly discussed unlawful enrollment and cancellation practices – calling out comments such as ‘“subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer.”’
Prime memberships include additional perks like access to Prime Video and Music, but per The Hollywood Reporter, FTC allegations also involved claims that some users only intended to sign up for the lower-cost Prime Video-only option.
The FTC said Amazon hid the option for Prime Video-only subscriptions in order to upsell consumers into higher-priced alternatives and took issue with Amazon not offering users the ability to cancel subscriptions from the Prime Video app or on Amazon Firesticks, THR reported.
“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,” stated FTC Chairman Andrew N. Ferguso. “Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
As part of the settlement, Amazon is required to stop unlawful practices and make changes to the Prime enrollment and cancellation flows, such as including a clear and obvious button for customers to decline Prime and prohibiting Amazon from having a button that says, “No, I don’t want Free Shipping.”
The FTC filed the proposed order in the U.S. District Court for the Western District of Washington.