Amazon has agreed to a historic $2.5 billion settlement with the Federal Trade Commission, which announced the agreement on Thursday. The case centered on claims that Amazon deceived consumers into subscribing to its Prime subscription plan, then made cancellation difficult.
The agency states in a press release that under the terms of the agreement, Amazon will pay a civil penalty amounting to $1 billion and relinquish $1.5 billion in refunds to a total of 35 million consumers who were “harmed by their deceptive Prime enrollment practices.”
According to the agency, it is the highest civil penalty in an action concerning a violation of an FTC rule. It is also the second-highest award of restitution that the FTC has received.
The settlement was reached several days after a trial between the FTC and Amazon. The lawsuit, filed during the Biden administration in 2023, focused on the company’s cancellation policies.
FTC Chairman Andrew N. Ferguson said, “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.”
“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,” he further states.
“Amazon and our executives have always followed the law, and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world,” adds Spokesperson of Amazon Mark Blafkin.
The company and its executives also failed to acknowledge any misconduct and claimed that they had made the changes described by the FCC.
That is accompanied by the fact that Amazon can no longer afford the “No, I don’t want Free Shipping” button. The FTC also asserted that the company must put “clear and conspicuous disclosures” of the terms of Prime on the enrollment process and provide “easy ways” to exit the program.
Prime, which is offered at $14.99 per month or $139 annually, is a hallmark of the company’s offerings and generates billions of dollars. It was first started as an add-on to fast delivery.
Prime has since expanded into a multi-pronged service to provide streaming entertainment, grocery delivery, fuel and food delivery benefits, and subscriber-exclusive deal offers.
Amazon does not reveal the number of subscribers in the US alone, but in a third-party analysis prepared by Consumer Intelligence Research Partners, the company had an estimation of 197 million customers as of March 2025.
According to Emarketer analyst Zak Stambor, the $2.5 billion payout is equal to 5.6 percent of the subscription revenue of Prime, which was $44 billion last year. He states that the settlement might “streamline Prime’s cancellation process, but it won’t dent the program’s dominance.”
Former FTC chair Lina Khan, who headed the agency at the time of the lawsuit, told social media on Thursday that a settlement a few days into the jury trial of Amazon saved the company, she said, “from likely being found liable for having violated the law,” allowing it to “pay its way out.”
She further added that “A $2.5 billion fine is a drop in the bucket for Amazon and, no doubt, a big relief for the executives who knowingly harmed their customers.”
