Amazon just paid $2.5 billion to make one of its biggest legal headaches go away. As the Associated Press reports, the retail giant reached a record-breaking settlement with the Federal Trade Commission (FTC) to end a lawsuit accusing it of tricking customers into signing up for Prime and then making it notoriously hard to cancel.
The deal includes $1 billion in civil penalties — the largest fine in FTC history — and $1.5 billion in refunds for customers who were either inadvertently signed up for Prime or who gave up trying to cancel because Amazon made the process a bureaucratic nightmare.
A trial-avoiding agreement at the last minute
Companies often love to prevent the discovery process
Credit: Source: Unsplash
If you’ve ever felt like unsubscribing from Prime was its own Greek epic, you’re not wrong. Internally, Amazon even called its cancellation flow “Iliad,” a nod to the famously long siege of Troy. Customers had to click through three separate pages to confirm they really, really wanted to quit, a design choice that FTC regulators said was intentionally confusing.
The settlement came just days into trial in Seattle, suggesting Amazon saw the writing on the wall. “It just took a few days for them to see that they were going to lose,” said Chris Mufarrige, head of the FTC’s Bureau of Consumer Protection.
Amazon, for its part, said it still thinks it would have won the case but wanted to put the legal fight behind it. “We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership,” said Amazon spokesperson Mark Blafkin. The company admitted no wrongdoing.
Refunds will roll out automatically for some Prime members who signed up through certain checkout pages between June 23, 2019, and June 23, 2025. Payments will be up to $51 per person. Amazon will also set up a claims process for more than 30 million other potentially affected customers.
As part of the settlement, Amazon must clearly disclose subscription costs and make sure cancellation isn’t “difficult, costly, confusing or time-consuming.” The FTC specifically banned the use of dark patterns that utilize misleading language like “No thanks, I don’t want free shipping” when declining Prime sign-ups.
Prime remains a cash cow for Amazon, boasting over 200 million members worldwide and generating $12 billion in subscription revenue last quarter alone.
