Amazon Agrees to Pay $2.5 Billion in Settlement Over Alleged Manipulation of Prime Membership Cancellation Process

In a significant development, e-commerce giant Amazon has reached an agreement to settle a high-profile legal dispute regarding its Prime membership program. The settlement comes after U.S. regulators accused the company of employing web designs that reportedly led tens of millions of consumers into subscribing to auto-renewing Prime memberships, which were intentionally made difficult to cancel.

The Federal Trade Commission (FTC) announced that Amazon will pay a record-breaking $1 billion in civil penalties to the government and an additional $1.5 billion in reparations to affected consumers, without admitting any wrongdoing.

When contacted for comment, Amazon has yet to respond.

The settlement was reached as the trial was about to commence in Seattle, Amazon’s hometown. The case, marked by its complexity in antitrust matters, was set for a jury to determine whether Amazon had violated any laws.

The FTC filed the lawsuit in 2023, alleging that Amazon had illegally used deceptive or coercive designs to enroll shoppers into auto-renewing Prime subscriptions. The cost of these subscriptions is currently $139 per year or $14.99 monthly. Furthermore, the FTC claimed that Amazon designed a complex, multi-step cancellation process intended to discourage people from cancelling their subscriptions, and that Amazon had repeatedly reneged on plans to simplify this process due to fewer subsequent subscribers.

Throughout the legal proceedings, Amazon maintained its innocence, arguing that its designs and disclosures complied with or even exceeded common industry standards. The company contended that its processes were clear to the majority of Amazon customers who chose Prime for benefits such as free two-day shipping.

Amazon still faces a larger federal lawsuit, in which the FTC has accused the company of operating as a monopoly. Amazon has described this suit as “erroneous on the facts and on the law.” The trial for this case is scheduled for early 2027 before Judge John Chun of the U.S. District Court for the Western District of Washington.

Editor’s note: Amazon is among recent financial supporters of NPR and pays to distribute some NPR content.