Amazon $2.5B FTC Settlement for Prime Misleading

Seattle – Amazon has agreed to a $2.5 billion settlement with the Federal Trade Commission (FTC) over allegations that it misled customers into signing up for Prime memberships and made cancellations difficult.

The settlement includes $1 billion in civil penalties—the largest fine in FTC history for a rule violation—and $1.5 billion in refunds to affected consumers. The case went to trial this week in US District Court in Seattle and is based on the 2010 Restore Online Shoppers' Confidence Act, which protects consumers from undisclosed online charges.

Chris Mufarrige, director of the FTC’s Bureau of Consumer Protection, said, “It just took a few days for them to see that they were going to lose. And they came to us and they paid out.”

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Amazon said it opted to settle quickly despite confidence in its case and admitted no wrongdoing. Spokesman Mark Blafkin said, “This settlement allows us to move forward and focus on innovating for customers. We work hard to make it clear and simple for customers to sign up or cancel their Prime membership.”

Eligible Prime members may receive automatic refunds of up to $51 for subscriptions made via “Single Page Checkout” and other links between June 23, 2019, and June 23, 2025. A claims process will also be set up for more than 30 million customers affected by other subscription issues. Refunds will be issued within 90 days.

Amazon Prime, which offers perks such as faster shipping, video streaming, and Whole Foods discounts, costs $139 annually or $14.99 monthly. The service has over 200 million members and generated more than $12 billion in subscription revenue as of July 2025, up 12% from last year.

The FTC complaint detailed that Amazon made it difficult for customers to purchase items without automatically enrolling in Prime. The cancellation process, internally dubbed “Iliad,” required customers to confirm their cancellation across three pages.

The FTC began investigating Amazon’s subscription practices in 2021, and the lawsuit was filed in 2023 under former FTC Chair Lina Khan. The agency has also filed a broader antitrust case against Amazon for alleged monopolistic practices.

Under the settlement, Amazon must clearly disclose subscription costs, obtain express consent for charges, and make automatic renewals and cancellations simple and transparent. No additional changes beyond the current sign-up and cancellation process are required.