Amazon has agreed to pay $2.5 billion from the Federal Trade Commission (FTC) to resolve the lawsuit on allegations that it made it difficult for users to pay for a Prime subscription and cancel their membership.
The company will need to pay a $1 billion civil penalty and provide a $1.5 billion refund to an estimated 35 million consumers damaged by the company’s “deceptive prime registration practices,” the FTC says. Amazon also needs to suspend “illegal registration and cancellation practices.”
The lawsuit, filed under the Biden administration in June 2023, alleged that Amazon caused confusion and created a deceptive user interface that led consumers to register with Prime without knowing. The FTC also claimed that it created a complex process in which consumers attempt to cancel their subscriptions by carrying out unnecessary steps.
The settlement comes when Amazon and the FTC only just began trial this week, and during that time the ju judges were to decide the outcome.
“Amazon has shown that it has made it extremely difficult for consumers to terminate their subscriptions with Prime,” FTC Chairman Andrew N. Ferguson said in a press release. “Today, we’re bringing billions of dollars back into Americans’ pockets and making sure Amazon never does this again.”
As part of the settlement, Amazon must include a clear button that will deny customers sign up for Prime. This means that the company will never lose the “No, I don’t want free shipping” button.
Additionally, Amazon must clearly disclose subscription costs during the registration process. Billing dates and frequency, automatic subscription renewals, and cancellation procedures In addition, you should create an easy way for consumers to cancel Prime using the same methods they used to sign up for the service.
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“Amazon and our executives have always followed the law, and this settlement allows us to focus on innovation for our customers,” Amazon said in a statement. “We are working very hard to make it clear and simple that our customers sign up or cancel key memberships and provide significant value to millions of loyal key members around the world. We continue this and look forward to what we offer Prime members in the coming years.”
This settlement is one of the biggest in the history of the FTC. In 2019, Facebook (now Meta) reached a $5 billion settlement with the agency for violating consumer privacy.
It’s worth noting that Amazon is still facing another federal lawsuit. The lawsuit accuses the FTC of competing in illegally stifling competition to become one of the most valuable companies in the world with its ubiquitous retail presence.
