Amazon will pay $2.5 billion to settle Federal Trade Commission allegations that it misled consumers into enrolling in its Prime subscription service and obstructed their efforts to cancel. The agency announced the agreement Thursday, just three days after the trial opened in a Seattle federal court.
The FTC filed the lawsuit in June 2023, accusing the retail giant of tricking tens of millions of users into unwanted Prime memberships. The settlement includes a $1 billion civil penalty and $1.5 billion in refunds for an estimated 35 million customers. Eligible users will receive up to $51 within 90 days, according to the agency.
The deal spares Amazon from the risk of a jury verdict that could have resulted in larger damages. Three senior executives had faced potential personal liability if the trial continued.
Under the settlement, Amazon must clearly disclose Prime’s terms, obtain explicit consent before charging customers, and provide a straightforward way to cancel. The company admitted no wrongdoing, noting it had already implemented many of the measures cited by regulators.
Two executives, Prime chief Jamil Ghani and senior vice president Neil Lindsay, are also barred from unlawful conduct under the agreement.
FTC Chairman Andrew Ferguson called the fine a “monumental win” for the agency under the Trump administration. “The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay,” he said.
Amazon spokesperson Mark Blafkin said the company has always complied with the law and welcomed the chance to move forward. “This settlement allows us to move forward and focus on innovating for customers,” he said.
The penalty ranks among the largest imposed by the FTC, though far smaller than the $5 billion fine levied on Facebook in 2019. At about 0.1% of Amazon’s $2.4 trillion market cap, the financial impact is limited. Shares of Amazon rose slightly after the announcement.
Prime, launched in 2005, now has more than 200 million members worldwide. For $139 annually, subscribers receive perks such as free shipping and access to streaming. Data shows Prime members shop more often and spend more than non-members.
Despite the settlement, Amazon continues to face a broader antitrust lawsuit. In 2023, the FTC and 17 state attorneys general accused the company of abusing monopoly power to inflate prices and exclude rivals. That case is scheduled for trial in 2027 after a partial dismissal last year.
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