Amazon is set to pay a multi-billion-dollar fine to settle claims that it misled customers into renewing their Prime subscriptions.
The Federal Trade Commission announced on Thursday that it had settled the case with a $2.5 billion fine, of which $1.5 billion will go toward refunding customers. The settlement came just days after Amazon’s trial in Seattle began.
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said FTC Chairman Andrew N. Ferguson said in a statement.
Shares of Amazon dipped slightly after the unexpected announcement. Amazon has a market cap of roughly $2.25 trillion, meaning the settlement is less than 0.1% of the company’s overall value.
The $1.5 billion in customer refunds is for an estimated 35 million consumers impacted, the FTC said. According to the agency, it is the second-highest restitution award obtained by the FTC.
As part of the settlement, Amazon must create “an easy way for consumers to cancel Prime,” the FTC said. The company can also no longer have a button that says “No, I don’t want Free Shipping.” Amazon must also pay for independent, third-party monitoring to ensure it complies with the terms of the settlement.
The FTC first sued Amazon in 2023. According to the lawsuit, Amazon had violated the Restore Online Shoppers’ Confidence Act, which banned deceptive online sales practices. In court filings, the FTC said it had evidence that Amazon executives were aware of how confusing the Prime cancellation process was, but shelved plans to fix it.
“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,” Ferguson said in a statement.
Business Insider previously obtained internal Amazon documents that said that the drawn-out process for Prime cancellation was called “Iliad” after Homer’s epic poem.
