Amazon.com Inc. has agreed to pay a record $2.5 billion to settle Federal Trade Commission (FTC) allegations that the company misled customers into subscribing to its Prime membership service and created barriers to cancellation.
The settlement, announced Thursday, includes $1 billion in civil penalties — the largest fine in FTC history for a rule violation, and another $1.5 billion in consumer refunds for customers who were enrolled in Prime without clear consent or deterred from canceling their subscriptions.
The agreement comes just days after trial proceedings began in federal court in Seattle, bringing a swift resolution to a case that has been brewing since 2021. The dispute centers on alleged violations of the Restore Online Shoppers’ Confidence Act, a 2010 federal law requiring clear disclosure of online charges.
Amazon admitted no wrongdoing, but it chose to settle rather than face potentially years of litigation. “Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” company spokesman Mark Blafkin said.
Amazon defended its practices, asserting it works “incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members.”
FTC officials indicated Amazon faced mounting legal pressure, with the consumer refund amount exceeding the agency’s expert projections. Investigators at the agency found Amazon leadership actively slowed or rejected proposed changes that would have simplified the cancellation process.
According to the FTC complaint, Amazon deliberately designed its checkout process to trick customers into Prime subscriptions. The agency alleged that purchase completion buttons failed to clearly indicate they would also enroll customers in the $139 annual fee or $14.99 monthly service.
The cancellation process proved equally problematic. Amazon internally nicknamed the multi-step cancellation procedure “Iliad” in reference to Homer’s epic poem about the lengthy siege of Troy. The process required customers to navigate three separate pages to confirm their desire to cancel.
Prime represents a cornerstone of Amazon’s business model, boasting more than 200 million global subscribers who receive benefits including expedited shipping, video streaming access, and Whole Foods discounts. The service generated more than $12 billion in subscription revenue for Amazon in its latest quarterly report, up 12% from the year-ago quarter.
The settlement affects millions of customers across multiple categories. Eligible Prime subscribers who signed up through the company’s “Single Page Checkout” between June 23, 2019, and June 23, 2025, will automatically receive refunds of up to $51 within 90 days. An additional 30 million customers affected by other aspects of the case will be able to file claims through a process Amazon must establish.
The investigation began in 2021 during the Trump administration but culminated in a 2023 lawsuit filed under former FTC Chair Lina Khan, a prominent antitrust scholar appointed by President Biden. The case preceded a separate antitrust lawsuit against Amazon, in which regulators accused the company of monopolistic practices in online retail markets.
The penalty surpasses the previous FTC record of $5 billion levied against Meta Platforms Inc. (then Facebook) in 2019 for privacy violations, making it the largest fine ever imposed for violating an FTC rule applicable to all companies.
