Amazon pays billions to avoid accountability in Prime subscription scandal

Amazon has agreed to a historic $2.5 billion settlement with the Federal Trade Commission (FTC), resolving a two-year legal battle over allegations that the company misled US consumers into enrolling in its Prime subscription service and then made cancellation deliberately difficult. The agreement allows Amazon to avoid continuing a trial that began just days earlier.

As part of the settlement, the company will pay a $1 billion civil penalty and provide $1.5 billion in refunds to an estimated 35 million customers who were “harmed by their deceptive Prime enrolment practices,” the FTC announced in a September 25 press release.

The agency noted that this is the largest civil penalty ever in a case involving an FTC rule violation and the second-largest restitution award the commission has secured.

FTC Chair Andrew Ferguson hailed the outcome as a major victory for consumers. He described it as “a monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel.”

Ferguson added that evidence confirmed Amazon used “sophisticated subscription traps” to push customers into Prime and then made it “exceedingly hard” to cancel.

The original lawsuit, filed in 2023 under the previous administration, focused on Amazon’s cancellation policies. Although the company has since complied with FTC directives, an article published by CNN notes that it continues to deny any wrongdoing.

Among the required changes, Amazon can no longer use a “No, I don’t want Free Shipping” button to discourage cancellation. The company must also provide “clear and conspicuous disclosures” about Prime’s terms during sign-up and ensure there are “easy ways” to cancel.

Prime remains central to Amazon’s business model, costing $14.99 per month or $139 per year. Initially launched to offer faster delivery, the service has expanded into a wide-ranging package that includes video and music streaming, grocery delivery, fuel and food discounts, and exclusive deals.

While Amazon does not publicly share subscriber figures, Consumer Intelligence Research Partners estimates that as of March 2025, Prime had 197 million US members. According to CNN sources, the $2.5 billion settlement amounts to about 5.6% of Prime’s subscription revenue from the previous year.

Former FTC chair Lina Khan, who led the agency when the lawsuit was filed, criticized the settlement.

She said reaching an agreement just days into trial spared Amazon “from likely being found liable for having violated the law,” allowing the company to “pay its way out.” In her words: “A $2.5 billion fine is a drop in the bucket for Amazon and, no doubt, a big relief for the executives who knowingly harmed their customers.”

By Nazrin Sadigova