Amazon has consented to a $2.5 billion penalty and support for its Prime members to settle the case with the U.S. Federal Trade Commission (FTC).
According to the FTC, approximately $1.5 billion will be allocated to a fund for reimbursing qualifying subscribers, in addition to the billion-dollar civil fine.
The FTC, which oversees consumer protection in the United States, filed a lawsuit against Amazon in 2023 during the Biden administration, accusing the company of enrolling millions of customers in a subscription service without their consent and trapping them in a complicated cancellation process.
The case was heard in a federal court in Seattle earlier this week and is expected to continue for a month.
Andrew N. Ferguson, the Trump-appointed chair of the FTC, celebrated this as “a historic victory for countless Americans who are frustrated with deceptive subscription practices that are nearly impossible to cancel.”
“Evidence indicated that Amazon employed complex subscription tactics aimed at manipulating consumers into signing up for Prime, making it exceedingly difficult for them to cancel their subscriptions,” Ferguson stated. “Today, we are returning billions of dollars to Americans and ensuring that Amazon does not repeat these actions.”
As part of the settlement, Amazon is required to provide a “clear and prominent” option for customers to decline Prime subscriptions while shopping on the site, according to the FTC. The company has previously claimed that it has made improvements to its registration and cancellation processes, describing the FTC’s allegations as outdated.
“We are dedicated to ensuring our customers find it clear and straightforward to sign up or cancel significant memberships while providing valuable services to millions of loyal members globally,” stated the company.
Following the announcement, Amazon’s stock remained relatively stable in New York.
The company faces an additional case initiated by the FTC regarding its alleged maintenance of an illegal monopoly. This case is set to go to trial in 2027 and is presided over by the same judge as the Prime case.
This lawsuit is part of a broader legal action against a major U.S. tech corporation accused of abusing its market position to the detriment of smaller competitors. In subsequent legal maneuvers, Google was designated an illegal monopoly but avoided the government’s most severe penalty.
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