Amazon Settlement
Amazon has achieved a historical settlement of $2.5 billion with a US business watchdog due to allegations that caused customers to register for Prime membership. The Federal Trade Commission (FTC) accused the online giant of deceiving customers into the membership system – which offers advantages such as faster delivery – and making it difficult to cancel.
Allegations and Settlement
The company based in Seattle will pay $1 billion in civil penalties and $1.5 billion, which will be repaid to customers who were unintentionally enrolled or had trouble terminating their subscriptions. Around 35 million Prime customers are entitled to a payment from the $1.5 billion fund, said the FTC. Customers who registered between June 23, 2019, and June 23, 2025, for certain offers for Prime and then only used a few first-class advantages, will automatically receive $51.
Intentional Deception
The FTC accused Amazon of making it intentionally difficult for customers to buy an article without being able to subscribe to Prime. It added that in some cases, customers were presented with a button to complete their transactions, which did not make it clear that they would be enrolled in Prime. A subscription was often too complicated, and Amazon slowed down or hindered changes that would have made the cancellation easier, according to an FTC complaint.
Cancellation Process
The process of deregistration, in which customers have to confirm their request on three pages after termination, was internally referred to as "Ilias", an old Greek epic of Homer about the Trojan War, according to the complaint. The settlement came just a few days after the start of a trial in Seattle this week. Chris Mufarigen, director of the Bureau of Consumer Protection, said: "I think it only took a few days until they saw that they would lose. And they came to us and they paid."
Amazon’s Response
Amazon, who did not admit misconduct in the case submitted two years ago, was confident that it would win the case, but decided to solve it quickly instead of potentially long-term court hearings. Mark Blafkin, spokesman for Amazon, said: "Amazon and our managers have always followed the law, and this settlement enables us to get ahead and concentrate on innovations for customers. We work incredibly hard to make customers clear and easy to register their Prime membership as well as to cancel it."
Terms of the Settlement
As part of the settlement, Amazon is forbidden to misrepresent the conditions of the subscriptions. It must fully disclose the costs to be incurred and obtain the express consent of the customer for the fee, with a clear option for customers to accept or reject a first-class subscription that is offered during the purchase. Amazon said that the agreement does not require that it will make additional changes just to maintain its current registration and cancellation process, which it had set up for one year.
