The United States government has announced that Amazon must pay $2.5 billion to settle claims that the company duped people into signing up for Prime and “knowingly made it difficult” for people to cancel. The Federal Trade Commission said Amazon will be forced to pay $1 billion in a civil penalty and $1.5 billion in refunds to consumers. Also as part of the settlement, Amazon must agree to “cease unlawful enrollment and cancellation practices for Prime.”
It takes Amazon about 13 hours to make $1 billion, so the penalty isn’t likely to hurt the company financially, but the FTC touted the precedent that’s being set here.
What did the FTC say?
FTC chairman Andrew N. Ferguson said, “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.”
“Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
Also as part of the deal, Amazon is required to make changes to its Prime enrollment policies. The FTC is requiring Amazon to remove the “No, I don’t want free shipping” button and instead offer a “clear and conspicuous button” for people to avoid signing up for Prime if they don’t want to.
Amazon must also offer disclosures about the Prime enrollment process, including the cost, billing frequency, details about auto-renewal, and how to cancel. On that point, the FTC is mandating that Amazon make it just as easy to cancel Prime as it is to sign up for it. “The process cannot be difficult, costly, or time-consuming and must be available using the same method that consumers used to sign up,” the FTC said.
As part of the settlement, Amazon did not admit any wrongdoing. A spokesperson, however, told Reuters, “We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world.”
How to get free money
The FTC said around 35 million Prime members will be eligible to receive money from the $1.5 billion fund. If you signed up for Prime between June 23, 2019 and June 23, 2025 through select offers and used no more than three Prime benefits in a 12-month period, you will get up to $51 as part of the settlement, per court documents. There is no further action required by affected claimants, as the money will be automatically refunded.
The FTC announced the settlement just ahead of the next big Prime Big Deal Days sale period happening at the retailer October 7-8.
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