Amazon.com, Inc. (NASDAQ: AMZN) has agreed to a $2.5 billion settlement over accusations that it misled millions into joining its Prime subscription and then made canceling difficult.
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The deal, announced on Thursday, stemmed from a 2023 Federal Trade Commission lawsuit that challenged Amazon's treatment of shoppers and its self-proclaimed role as a consumer-focused company, according to The New York Times.
Settlement Details
- The agreement includes $1 billion in fines and $1.5 billion in compensation for customers, with eligible users expected to receive approximately $51 each.
- The FTC called it one of its largest settlements ever.
- Amazon did not admit liability, but also did not contest the claims.
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Prime Membership Impact
Prime Members spend more frequently and in higher amounts than non-subscribers, making them Amazon's most valuable customers. About 200 million Americans use Prime, which generated over $44 billion in revenue in 2024.
FTC's Broader Agenda
FTC Chair Andrew Ferguson has focused on challenging major tech firms, accusing them of curbing competition and harming consumers.
The agency has also launched antitrust cases against Amazon and Meta, while investigating the practices of AI firms involving children and the large tech investments in AI startups.
An FTC official stated that the settlement aligns with Ferguson's consumer-first approach, aiming to restore fairness.
Direct Customer Relief
Within 90 days, Amazon will pay $51 to shoppers who match the FTC's criteria, such as those who enrolled but made little use of Prime benefits.
Customers who feel they were tricked into joining or blocked from canceling will also receive notice on how to file claims.
Amazon’s Statement
Amazon released an official statement regarding the FTC agreement.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” Amazon wrote in the statement.
“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. We will continue to do so, and look forward to what we'll deliver for Prime members in the coming years.”
AMZN Price Action: Amazon stock was down 0.65% at $218.77 on Thursday, according to data from Benzinga Pro.
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