Amazon reaches ‘historic’ $2.5B Prime settlement

Tractor trailer semi truck with logos for Amazon Prime service and text reading "There's more to Prime, a truckload more" traveling on the 680 Freeway in Walnut Creek, California, July 31, 2017. Amazon is increasingly developing its own shipment and delivery infrastructure to avoid reliance on postal carriers.

Amazon has 90 days to refund $51 to customers who signed up between June 2019 and June 2025

(Image credit: Smith Collection / Gado / Getty Images)

What happened

Amazon has settled a lawsuit over allegations it tricked customers into signing up for Prime membership and made it too onerous to end their subscriptions, the Federal Trade Commission announced Thursday. Amazon agreed to pay a $1 billion civil penalty and up to $1.5 billion in refunds to an estimated 35 million affected customers.

Who said what

Amazon relied on “sophisticated subscription traps designed to manipulate consumers into enrolling in Prime,” then “made it exceedingly hard” to cancel, FTC Chair Andrew Ferguson said. An Amazon spokesperson said the e-commerce giant had “always followed the law” and could now “move forward and focus on innovating for customers.” The company did not admit or deny wrongdoing in the settlement.

The “historic” settlement, one of the largest in U.S. history, was a “surprise,” coming days after the case went to trial in federal court in Seattle, The Associated Press said. The fine “rivals some of the large penalties” levied by the European Union’s aggressive privacy and competition regulators, The Washington Post said, but it’s also just a “fraction” of Amazon’s “nearly $60 billion” in profits last year. This is a “drop in the bucket for Amazon,” former FTC Chair Lina Khan, who filed the case in 2023, said on social media. “And, no doubt, a big relief for the executives who knowingly harmed their customers.”

What next?

Amazon has 90 days to automatically refund $51 to customers who signed up between June 2019 and June 2025 through a deceptive sign-up process, then barely used the service or watched Prime Video. Other customers who could qualify will be contacted with directions to apply for refunds.

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Rafi Schwartz has worked as a politics writer at The Week since 2022, where he covers elections, Congress and the White House. He was previously a contributing writer with Mic focusing largely on politics, a senior writer with Splinter News, a staff writer for Fusion's news lab, and the managing editor of Heeb Magazine, a Jewish life and culture publication. Rafi's work has appeared in Rolling Stone, GOOD and The Forward, among others.