Amazon will pay $2.5 billion in penalties and refunds to settle allegations that it enrolled its customers in Prime subscriptions without their consent and made it difficult for them to cancel, the FTC announced Thursday.
Why it matters: $1.5 billion of that will go directly to Prime subscribers, capped at $51 per person.
Driving the news: In addition to the penalties and refunds, Amazon agreed to have improved disclosures and a simple way to cancel subscriptions.
What they're saying: "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," FTC chair Andrew Ferguson said in a statement.
- Amazon spokesperson Mark Blafkin told Axios in a statement that "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," he said.
Catch up quick: The FTC lawsuit was filed in June 2023 under the Biden administration and FTC chair Lina Khan.
- Thursday's settlement also includes two executives whom the FTC sued along with Amazon. There was no admission of guilt by the company or the executives.
Here's what to know about refunds for Prime subscribers:
How and when eligible subscribers will get a refund
Amazon will refund subscribers in two waves, per the court.
- To qualify for a refund, subscribers must have signed up for Prime between June 23, 2019 and June 23, 2025.
The first group will receive an automatic pay out.
- That first group is made up of subscribers who had signed up for Prime through a "challenged enrollment flow" and haven't used more than three Prime benefits, defined as benefits "the member would not have received if they were not a Prime member."
- Challenged enrollment flows include "any version of the Universal Prime Decision Page, the Shipping Option Select Page, Prime Video enrollment flow or the Single Page Checkout."
- Amazon will pay these customers "the total amount of membership fees paid" during a subscription, capped at $51.
These consumers do not need to submit claims, and Amazon shall distribute payments within 90 days.
The second group will have to fill out a form after the automatic pay out period has ended.
- This group constitutes those who signed up through a challenged enrollment flow or unsuccessfully tried to cancel their memberships during the five-year period, and haven't used more than 10 Prime benefits during any 12-month period of enrollment.
- The court defines an attempt to cancel as "entering, but failing to complete, the online cancellation process" or "taking a Save Offer during the online cancellation process."
Within 30 days of finishing automatic pay outs, Amazon will send a form to claims process eligible consumers.
- Consumers can then confirm whether they unintentionally enrolled, unsuccessfully attempted to cancel their subscription, or both.
- They will have up to 180 days after receiving the claims form to submit it to Amazon via e-mail, First-Class postage pre-paid mail, or the settlement website.
- Amazon will have up to 30 days to review and make a decision about a claim.
- Amazon will pay consumers in this group with valid claims the total amount of Amazon Prime membership fees as well, as much as $51.
What else is Amazon doing?
Amazon has also agreed to:
- Include "a clear and conspicuous button for customers to decline Prime." That's instead of "No, I don't want Free Shipping."
- Have better disclosures about "material terms" such as the cost, dates, and frequency of charges.
- Make a method to cancel Prime that's similar to how one signs up.
- Pay for an independent supervisor to verify Amazon's compliance in the consumer redress distribution process.
Of note: Amazon says that it has already taken these steps — in some cases, years ago — and that the settlement requirements reflect a sign-up and cancellation process that has been in place for several years.
Editor's note: This report was updated with additional comments from Amazon.
