Amazon will pay $2.5 billion to settle a lawsuit by the Federal Trade Commission that alleged the tech giant used deceptive methods to sign customers up for Prime memberships, the regulatory agency said. Amazon stock slipped a fraction Thursday.
The settlement comes as court proceedings had just kicked off for the FTC's lawsuit earlier this week. The complaint, launched in June 2023, alleged that Amazon enrolled customers into its Amazon Prime program without their consent and made it difficult to cancel the $139 annual membership.
Amazon will pay a $1 billion civil penalty and provide $1.5 billion to customers in refunds, according to the FTC. The company did not admit to wrongdoing in the agreement.
In a news release, FTC Chairman Andrew Ferguson said the settlement is a "monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel."
The fine is the largest ever for a case involving an FTC rule violation, the agency said.
As part of the settlement, Amazon must have a "clear and conspicuous" way for customers to decline offers to sign-up for Prime. The company can no longer have a button that says "No, I don't want Free Shipping." Users must also be able to cancel Prime with the same level of steps as it takes to sign-up, the FTC said.
Amazon did not immediately return a request for comment. A spokesperson told CNBC that Amazon has "always followed the law and this settlement allows us to move forward and focus on innovating for customers."
The FTC also sued Amazon in September 2023, accusing the company of broad anticompetitive tactics. The antitrust trial is not expected to begin until 2027.
Amazon Stock Nears 200-Day Line
In recent trade in the stock market today, Amazon stock was down a half-percent at 218.88. Shares have traded lower four straight days and are nearing a test of Amazon's 200-day moving average.
Amazon has not traded below that long-term investor support level since early May.
The settlement is small against Amazon's broader operations. Analysts project Amazon will post $709 billion in 2025 sales and $26 billion in free-cash-flow, according to FactSet data.
But investors will be watching whether the settlement has any effect on the growth of Prime sign-ups and its ability to retain those members. Subscription services revenue for Amazon is projected to reach $49 billion this year. And free-shipping and other perks for Prime members help drive sales for the broader e-commerce site.
Amazon had 197 million U.S. Prime subscribers as of March 2025, according to estimates from the research firm CIRP.
Meanwhile, Thursday's decline adds to a broader slump for Amazon stock. Shares are essentially flat year-to-date, the worst performance among Magnificent Seven stocks.
Beyond concerns about tariffs and retail, investors are also debating whether AI is disrupting Amazon's lead in the cloud-computing market.
