WASHINGTON — Amazon has agreed to pay $2.5 billion to settle a high-profile lawsuit filed by the Federal Trade Commission (FTC), which accused the online retail giant of using deceptive practices to enroll consumers in its $139-per-year Amazon Prime service and deliberately making cancellation difficult.
The lawsuit, filed in federal court in Seattle, alleged that Amazon knowingly misled millions of consumers during the checkout process, prompting them to sign up for Prime memberships without their informed consent. According to the FTC, practices resulted in unauthorized charges, a complex cancellation process, and widespread consumer frustration.
Amazon Prime Enrollment Practices Under Fire
At the heart of the FTC’s case were two major claims:
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Amazon enrolled customers in Prime without clear consent, using a confusing checkout interface that emphasized sign-up options while hiding the ability to decline.
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The cancellation process was intentionally convoluted, internally referred to as “Iliad” — a reference to Homer’s epic poem about the long and grueling Trojan War.
Consumers often encountered small, hard-to-find links to opt out of Prime during checkout, while large, prominent buttons encouraged them to enroll. Key details, such as the $139 annual fee and the auto-renewal feature, were frequently buried in fine print or not disclosed upfront, the FTC said.
Under the terms of the settlement, Amazon will pay:
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$1.5 billion into a consumer refund fund
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$1 billion in civil penalties
The settlement also mandates major reforms to Amazon’s Prime subscription and cancellation systems, including:
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Clear, conspicuous options to decline Prime membership
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Prohibition of vague language like “No thanks, I don’t want free shipping”
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Mandatory disclosure of subscription pricing and automatic renewal terms before any charges
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Implementation of improved consent procedures prior to enrollment
In a statement following the settlement, FTC Chairman Andrew Ferguson said:
“Today, we are putting billions of dollars back into Americans’ pockets and making sure Amazon never does this again.”
He added that under the Trump administration, the FTC remains committed to holding large corporations accountable:
“We will fight back when companies try to cheat ordinary Americans out of their hard-earned pay.”
Amazon, which did not admit any wrongdoing, defended its practices but acknowledged the need to move forward. The company stated:
“Amazon and our executives have always followed the law, and this settlement allows us to focus on innovating for customers.”
It added that the company has worked “incredibly hard” to make it easy for customers to sign up for and cancel Prime membership, and to ensure transparency about the benefits and pricing of the service.
According to him, many of the reforms outlined in the settlement have already been implemented.
Despite the significant monetary value of the settlement, critics argue that it does not go far enough. Former FTC Chair Lina Khan, who initiated the case under the previous administration, called the $2.5 billion penalty:
“A drop in the bucket for Amazon and, no doubt, a big relief for the executives who knowingly harmed their customers.”
Legal experts also pointed to a pre-trial ruling that weakened Amazon’s position. Just a week prior to the settlement, a federal judge ruled that Amazon had violated consumer protection laws by enrolling users in Prime before fully disclosing the terms, including pricing and recurring charges.
This case is just one part of a broader bipartisan effort to regulate Big Tech after years of relative inaction. Amazon, along with other major tech platforms, has faced growing scrutiny over anti-competitive behavior, consumer privacy, and deceptive business practices.
While the settlement marks a win for the FTC, some analysts suggest that only more aggressive regulation and structural changes will truly curb the influence of tech giants like Amazon.
Still, the outcome sends a strong signal that even the most powerful corporations are not above consumer protection laws, and that deceptive subscription practices will not go unchecked.
Source- EWN
