Amazon has reached a $2.5 billion settlement to resolve claims that it misled tens of millions of users into signing up for Amazon Prime and made it difficult to cancel. The announcement came on Thursday, just days into a Seattle jury trial that began earlier this week.
While Amazon agreed to the settlement, the company neither admitted nor denied any wrongdoing.
Breakdown of the Amazon Prime Settlement
The $2.5 billion settlement includes:
- $1 billion in penalties
- $1.5 billion in payouts to customers
Eligible customers could receive approximately $51 each, according to a New York Times report.
Background of the Lawsuit
The lawsuit, filed by the Federal Trade Commission (FTC) in 2023, claimed that Amazon used deceptive tactics to enroll people in Prime and made it hard to cancel subscriptions.
- The case targeted Amazon’s subscription service, used by roughly 200 million people in the U.S.
- Prime subscriptions generated over $44 billion last year
- Prime members are especially valuable as they buy more frequently and spend more than non-members
FTC’s Role and Consumer Protections
FTC Chairman Andrew Ferguson has criticized big tech companies for hurting consumers and competition.
Under the settlement:
- Amazon must refund eligible customers within 90 days
- Eligible users include those who rarely use Prime benefits like video streaming
- Amazon will notify other customers who may have been unintentionally enrolled or prevented from canceling
Customers can submit a claim to receive compensation if they meet the qualification criteria.
