Amazon settles $2.5bn case over misleading Prime enrolments

Amazon has reached a $2.5bn (£1.9bn) agreement to put an end to a lawsuit brought by the US government, which alleged the company deceived millions into becoming Prime members and then created hurdles for those who tried to cancel.

According to the Federal Trade Commission (FTC), which announced the settlement, $1.5bn from the total sum will be allocated as refunds for affected customers.

The resolution was revealed shortly after a trial began in Seattle, with regulators describing it as a landmark win. It is the largest civil penalty ever secured by the FTC.

Amazon insisted that it had “always followed the law” but said the settlement would help the company “move forward.”

Prime subscribers enjoy benefits such as free delivery, movie streaming, and additional perks. Membership costs $139 per year or $14.99 per month in the United States, and £95 annually in the United Kingdom, with hundreds of millions of customers globally.

The FTC criticised Amazon’s methods, pointing to checkout pop-ups that frequently urged consumers to join Prime, capturing billing details without adequately presenting the terms, and failing to make opt-out choices obvious.

The watchdog also faulted the company’s one-month Prime trial offers, arguing that they did not clearly inform users they would be automatically enrolled once the trial ended. The agency maintained these practices violated consumer protection laws.

FTC Chairman Andrew Ferguson stated that 

“the evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription.” 

He added, “Today, we are putting billions of dollars back into Americans' pockets, and making sure Amazon never does this again.”

Regulators estimate that around 35 million Americans, who were subjected to these practices between June 2019 and June 2025, could qualify for refunds worth as much as $51 each.

Under the deal, Amazon will automatically reimburse users who accessed Prime benefits fewer than three times in the first year after joining. Those who used the service less than 10 times within a year will also be eligible but must file a claim.

The settlement also prohibits Amazon from presenting cancellation prompts such as “No, I don’t want free shipping.” Additionally, the company must provide a simple way for members to cancel Prime subscriptions.

The FTC argued that Amazon knew its practices could be questioned, citing internal communications in which staff and executives remarked that “subscription driving is a bit of a shady world.”

After the deal was made public, Amazon spokesperson Mark Blafkin said the company had worked 

“incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership.” 

He added, “Amazon and our executives have always followed the law, and this settlement allows us to move forward and focus on innovating for customers.”

The tech giant had already modified some of its practices while defending itself against the lawsuit, which was initially filed by the FTC in 2023 during Joe Biden’s presidency. 

The Commission was then under the leadership of Lina Khan, who built her reputation by demanding tougher oversight of big tech firms such as Amazon.

The current FTC chair, Andrew Ferguson, appointed earlier this year by President Donald Trump, has also pursued an aggressive stance toward large technology companies.

However, critics argued that the Commission should have gone further. Some said that if it truly wanted to crack down on abusive subscription systems, it would have pushed ahead with a rule requiring an easy cancellation option. 

That rule, introduced under the Biden administration, was struck down by an appeals court earlier in 2025.

Nidhi Hegde, executive director of the American Economic Liberties Project, criticised the outcome, saying, 

“Enough with this game of whack-a-mole. If the Commission is serious about protecting people from deceptive subscription schemes, it should re-issue the Click-to-Cancel rule today.”