Amazon has agreed to pay $2.5 billion to resolve allegations by the U.S. Federal Trade Commission (FTC) that it used deceptive practices to enroll customers into Amazon Prime memberships and made it unduly difficult for them to cancel. This settlement is one of the largest in the FTC’s history and marks a major regulatory win in the battle over subscription practices.
The Allegations
The FTC’s case centers on two key claims:
- Misleading Enrollment Practices
According to the FTC, Amazon designed its checkout flows and user interfaces in a way that nudged or trapped customers into subscribing to Prime, without giving them a clear and conspicuous way to avoid it. In many cases, customers were allegedly enrolled into Prime when they selected offers like “free shipping” without fully understanding that this meant accepting a recurring subscription. - Obstructive Cancellation Procedures
The FTC alleged that Amazon made cancellation overly complex — requiring multiple steps, confusing interfaces, or hidden menus — such that many customers who intended to cancel were prevented from doing so. Internal documents cited by the FTC suggest employees referred to the cancellation process as “Iliad,” implying a long, arduous journey.
The complaint also points to internal discussions at Amazon recognizing that its subscription tactics bordered on manipulative. The FTC said this behavior violated consumer protection laws including the Restore Online Shoppers’ Confidence Act (ROSCA).
Terms of the Settlement
Under the terms of the agreement:
- $1 billion will go toward civil penalties paid to the FTC
- $1.5 billion will be earmarked for refunds and redress to affected consumers
- Roughly 35 million Prime customers who enrolled between June 23, 2019, and June 23, 2025, and used fewer than three Prime benefits, will be eligible for a default payment. In many cases, this will amount to $51 per person.
- Customers who attempted to cancel their Prime membership but were unable to may file additional claims.
Beyond financial restitution, Amazon is required to make systemic changes, including:
- Adding a clear and conspicuous “decline Prime” option
- Disclosing all relevant terms upfront — cost, auto-renewal frequency, cancellation procedure
- Enabling cancellation via the same method customers used to enroll — without extra friction
- Paying for an independent, third-party monitor to oversee compliance and redress
Amazon neither admitted nor denied wrongdoing as part of the settlement, but agreed to abide by the new rules and design constraints.
Significance & Implications
- Record Penalty for Subscription Violations
The $1 billion in civil penalties is reportedly the largest ever for an FTC case involving consumer protection rules. The combined total of $2.5 billion makes this one of the agency’s most significant settlements. - Subscription Model Scrutiny
This case signals stronger regulatory attention on subscription-based business models, especially those that rely on “dark patterns” or asymmetrical opt-in versus opt-out flows. - Design & Transparency Requirements
The settlement forces Amazon to treat enrollment and cancellation more equally. Companies in the subscription space may now face a de facto standard: if you make it easy to sign up, you must also make it straightforward to leave. - Consumer Empowerment
Millions of users will benefit from refunds or improved cancellation rights. The settlement underscores regulatory willingness to protect consumers from manipulative UX practices. - Precedent for Other Platforms
Giants like streaming services, SaaS firms, and membership platforms will likely feel pressure to audit their subscription flows, clarify terms, and avoid hidden traps.
What Consumers Should Know
If you had a Prime membership during the covered period, here’s what to expect:
- You may automatically receive a refund (around $51) if you met the eligibility criteria
- If you attempted cancellation but failed, you can file a claim
- Amazon’s future Prime enrollment and cancellation processes should be more transparent and user-friendly
- Always review terms, auto-renewal clauses, and cancellation policies before subscribing to services
