[Alpha Biz= Paul Lee] Seattle/Washington, September 25 – Amazon has agreed to pay $2.5 billion to settle a lawsuit filed by the U.S. Federal Trade Commission (FTC), which alleged that the company misled consumers into enrolling in its Prime subscription service and made cancellations overly difficult. The agreement was reached just three days after trial proceedings began in federal court in Seattle.



Under the settlement, Amazon will pay $1 billion in civil penalties to the FTC and provide $1.5 billion in refunds to approximately 35 million consumers who were either unknowingly enrolled in Prime or faced delays in canceling.



The FTC’s 2023 lawsuit claimed Amazon violated federal law by failing to clearly disclose billing information and free trial terms, while also complicating the cancellation process. Going forward, Amazon must clearly disclose Prime program conditions, obtain explicit consumer consent before charging subscription fees, and provide a simple cancellation mechanism.



Amazon Prime currently has more than 200 million members worldwide, offering benefits such as free shipping and streaming services for an annual fee of $139.



The $2.5 billion sanction marks one of the largest penalties ever imposed by the FTC. In 2019, the agency levied a record $5 billion fine on Facebook for privacy violations.



Despite the historic scale of the penalty, analysts noted that the impact on Amazon is relatively modest compared to its vast resources. Former FTC Chair Lina Khan commented on X (formerly Twitter) that the settlement was “a drop in the bucket” for Amazon and “a relief for executives who deliberately harmed customers.”



Amazon shares fell 0.94% in New York trading following the announcement.

 

 

 

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