Amazon, the online shopping giant, has agreed to pay a historic $2.5 billion settlement after the Federal Trade Commission (FTC) accused the company of tricking customers into signing up for its Prime service. The FTC said Amazon made it hard for people to cancel their subscriptions, causing millions to pay for Prime without knowing it.
The settlement includes $1 billion in penalties to the government and $1.5 billion in refunds for affected customers. This is one of the largest settlements in U.S. history over online subscription practices.
How Customers Were Affected
The FTC’s complaint revealed that Amazon sometimes signed up people for Prime without their clear consent. Customers could click a button to buy an item, but it was not always obvious that they were also enrolling in Prime.
If someone wanted to cancel, the process was complicated. Internally, Amazon called the cancellation steps “Iliad”, referencing the long Greek poem. Customers had to confirm their decision to cancel on three different pages, making it frustrating and time-consuming.
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Millions of people may have been affected by these practices. Certain customers are now eligible for automatic refunds of up to $51. These include people who signed up through specific checkout pages between June 23, 2019, and June 23, 2025. Amazon also must create a claims process for over 30 million additional customers who may have faced similar difficulties with cancellation or were unaware they were signing up for Prime.
What Amazon Must Do
As part of the settlement, Amazon is required to make its subscription practices more transparent. The company must:
- Clearly show the costs of Prime membership before customers agree.
- Get express consent from customers before charging them.
- Provide a cancellation process that is easy, quick, and simple, without confusing steps.
- Clearly mark automatic renewals so customers know when their membership will continue.
The FTC highlighted that Amazon deliberately made it challenging to buy items without also subscribing to Prime. The settlement now forces the e-commerce giant to change these practices and provide more clarity to customers.
Amazon said it did not admit to any wrongdoing but chose to settle the case quickly instead of going through a long trial. The company stated it always tries to make subscription processes clear, but it agreed to resolve the matter and move forward.
The Scale of Amazon Prime
Amazon Prime is a major part of the company’s business. It offers perks such as faster shipping, video streaming, and discounts at Whole Foods. Membership costs $139 per year or $14.99 per month.
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The service has more than 200 million members worldwide. In its most recent financial report, Amazon recorded over $12 billion in subscription revenue, which includes Prime and other services like music and e-books.
Even with the $2.5 billion settlement, the company’s earnings are vast. The company generates roughly $2.5 billion in sales every 33 hours, making the settlement significant but manageable for the company.
The FTC first investigated Amazon’s Prime subscription practices in 2021 and filed the lawsuit in 2023. The agency’s goal was to ensure that online shoppers are not misled and that subscription processes are transparent and fair.
The settlement prohibits Amazon from misrepresenting subscription terms and requires clear options for customers to accept or decline Prime memberships during checkout. Language such as “No thanks, I don’t want free shipping” must no longer confuse customers about enrollment.
This settlement marks a major step in protecting online consumers and highlights the need for companies to make subscription services clear and easy to manage. Millions of Amazon customers now have refunds and a clearer way to understand what they are paying for.