FTC, Amazon settle for $2.5B over Prime enrollment and cancellations

Amazon agreed on Sept. 25 to pay a record $2.5 billion to settle a Federal Trade Commission lawsuit that accused the company of enrolling customers in Prime memberships without clear consent and making it unduly difficult to cancel. The settlement, reached in U.S. District Court in Seattle days after the case went to trial, resolves claims that Amazon used misleading checkout designs and a multi-step cancellation process to retain subscriptions.

Under the agreement the company will pay $1 billion in civil penalties to the federal government and set aside $1.5 billion for consumer redress, the FTC said. The agency estimated roughly 35 million U.S. customers could be eligible for payments. The FTC characterized the penalty as its largest ever in a case involving a rule violation and said the restitution figure is among the agency's largest awards.

The commission alleged that certain checkout flows on Amazon's site automatically enrolled shoppers in Prime or made enrollment insufficiently clear and that canceling Prime required navigating multiple confirmation pages. The FTC cited internal documents produced in discovery showing employees referred to the cancellation flow by the...