Amazon agrees to pay $2.5bn settlement after U.S. regulators accused it of deceiving millions into Prime subscriptions and making cancellations difficult.
Amazon has agreed to a record $2.5 billion settlement with the U.S. Federal Trade Commission (FTC), resolving a major legal battle over claims that the company misled millions of customers into subscribing to its Prime service and made the cancellation process unnecessarily difficult.
The settlement, announced Thursday, ends a two-year dispute between Amazon and federal regulators. Under the agreement, the company will pay a $1 billion civil penalty and provide $1.5 billion in refunds to about 35 million consumers allegedly affected by what the FTC described as “deceptive Prime enrollment practices.”
According to the agency, it is the largest civil penalty ever imposed in a case involving an FTC rule violation, and the second-largest restitution package in its history. The case marks a milestone in Washington’s ongoing efforts to curb what it sees as manipulative online business practices by major tech firms.
FTC Chairman Andrew Ferguson called the outcome a “monumental win for millions of Americans” who have struggled with subscriptions that are easy to start but difficult to end. “The evidence showed that Amazon used sophisticated subscription traps to manipulate consumers into enrolling in Prime,” Ferguson said.
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Amazon, however, denied any wrongdoing. “Amazon and our executives have always followed the law,” said company spokesperson Mark Blafkin. “This settlement allows us to move forward and focus on innovating for customers. We make it clear and simple to sign up for or cancel Prime, while continuing to deliver exceptional value to our members.”
As part of the agreement, Amazon must now display clearer disclosures about Prime’s terms during sign-up and simplify its cancellation process. The FTC also barred the company from using manipulative prompts such as the “No, I don’t want Free Shipping” button, which regulators said pressured users into joining Prime.
Prime, one of Amazon’s flagship services, costs $14.99 a month or $139 annually and has grown into a vast ecosystem offering fast delivery, streaming, and exclusive shopping deals. Research firm Consumer Intelligence Research Partners (CIRP) estimates that Amazon has about 197 million U.S. subscribers as of March 2025.
Analysts say the fine, while historic, is unlikely to dent Amazon’s dominance. The $2.5 billion payout represents about 5.6% of Prime’s $44 billion in subscription revenue last year.
Former FTC chair Lina Khan criticized the settlement, saying it allowed Amazon to “pay its way out” just days into its trial, calling the fine “a drop in the bucket” for the tech giant.
Africa Daily News, New York
