Amazon is facing a significant $2.5 billion settlement as the Federal Trade Commission (FTC) has accused the company of enrolling customers in its Prime subscription without their permission and complicating the cancellation process. This settlement, announced on Thursday, includes a $1 billion civil penalty and $1.5 billion in refunds for those affected.
FTC Chairman Andrew Ferguson stated, “We are putting billions back into Americans’ pockets and ensuring that Amazon cannot operate this way again.” He emphasized the FTC’s commitment to protecting everyday Americans from being taken advantage of by large corporations.
Eligible subscribers for refunds must have signed up for Prime between June 23, 2019, and June 23, 2025. Refunds will be distributed in two phases. The first group will receive an automatic payout within 90 days, while the second must complete a form after the initial payouts are processed.
The first group consists of customers who experienced a problematic enrollment process and used no more than three Prime benefits within a year, with payments capped at $51. The second group includes those who faced challenges in cancelling their membership within the specified period and also limited their use of Prime benefits to no more than ten within a year.
Amazon’s spokesperson remarked that the company has always adhered to the law, asserting, “This settlement allows us to move forward and focus on innovating for customers.” He mentioned that Amazon strives to make the subscription and cancellation processes simple and clear for its many loyal members.
In addition to financial payouts, the settlement requires Amazon to implement several changes. These include a clear button to decline Prime enrollment, better explanations of terms during sign-up, and a more straightforward cancellation method. A third-party monitor will ensure Amazon complies with these requirements.
Amazon claims it has already made many of the changes mentioned in the settlement over the past few years, aiming to improve the overall customer experience.
