Amazon agrees to historic $2.5 billion settlement over Prime membership fraud
- Amazon agreed to a $2.5 billion settlement to resolve FTC allegations regarding deceptive Prime enrollments and complicated cancellations.
- The settlement includes a $1 billion civil penalty and $1.5 billion in refunds to around 35 million affected consumers.
- As a result of this case, Amazon is required to amend its cancellation and enrollment processes to enhance transparency for customers.
In September 2025, Amazon reached a $2.5 billion settlement with the Federal Trade Commission (FTC) regarding allegations of misleading consumers about its Prime service. The FTC claimed that Amazon employed deceptive methodologies leading customers to unintentionally sign up for Prime memberships, ultimately complicating the cancellation process. The settlement came after a trial initiated earlier that month in Seattle, which arose from a lawsuit filed in June 2023, revealing the company's deceptive practices spanned several years. As part of the agreement, Amazon will pay $1 billion in civil penalties, marking the largest fine in FTC history related to rule violations, alongside $1.5 billion in refunds to approximately 35 million affected consumers. This payment structure highlights the significant scale of Amazon's Prime service, which boasts over 200 million subscribers, and the complaints surrounding the ease of unintentionally enrolling. The investigation revealed that the tactics Amazon employed included creating complex user interfaces aimed at manipulating consumer decisions. Customers reported confusion regarding the sign-up process, with interfaces that obscured cancellation options and created what the FTC described as 'sophisticated subscription traps.' As a result of these practices, affected consumers may receive refunds amounting to $51 each, reinforcing the FTC's commitment to consumer protection and transparent business practices. Following the settlement, Amazon stated that it did not admit wrongdoing but emphasized its focus on innovation and customer service moving forward. The settlement requires Amazon to implement changes to its enrollment and cancellation processes to prevent similar deceptive practices in the future. This includes making cancellation easier and more intuitive, ensuring that consumers are clear about the terms of their subscriptions. The resolution of this case reflects ongoing tensions between large tech firms and regulatory bodies concerning consumer rights and ethical business practices.