TL;DR: Amazon agreed on Thursday to pay $2.5 billion to settle allegations by the FTC that it misled customers into signing up for Prime memberships and made the cancellation process unnecessarily difficult. The settlement brings an end to a trial that had just begun earlier this week in federal court in Seattle.
Under the agreement, Amazon will pay a $1 billion penalty to the FTC and refund $1.5 billion to an estimated 35 million customers who were charged for Prime memberships they did not intend to keep. According to the agency, eligible customers could receive refunds of up to $51, which are expected to be distributed within 90 days.
The settlement prohibits Amazon from falsely representing the terms of Prime. It requires the company to secure clear and informed consent from customers before charging for memberships and to maintain an accessible cancellation option.
While Amazon did not admit to any wrongdoing, the company noted that many of the required changes – such as a streamlined cancellation process – had already been implemented. The settlement also imposes restrictions on two senior executives: Jamil Ghani, who oversees Prime, and Neil Lindsay, a senior vice president in Amazon's health division and former Prime executive. Both are required to comply with the FTC's conduct provisions.
FTC Chairman Andrew Ferguson described the penalty as a major achievement for the agency, calling it evidence of the Trump administration's commitment to protecting consumers from deceptive practices. Amazon, in turn, emphasized that the resolution allows the company to focus on its business rather than a protracted trial.
"Amazon and its executives have always followed the law," company spokesperson Mark Blafkin said in a statement.
The $2.5 billion settlement is one of the largest ever secured by the FTC, though it falls short of the record $5 billion fine imposed in 2019 against Facebook, now Meta, for privacy violations. For Amazon, the financial hit amounts to a tiny fraction of its market value, currently about $2.4 trillion.
Prime remains one of Amazon's most profitable businesses. Introduced in 2005, the membership program now has more than 200 million members worldwide. Priced at $139 annually, Prime offers free shipping along with digital perks such as video streaming (which is no longer ad-free, even for paid subscribers). Studies have shown that Prime members spend significantly more than nonmembers.
The resolution of this case does not end Amazon's regulatory battles. In 2023, the FTC and 17 state attorneys general sued the company, alleging it used monopoly power to suppress competition in online retail. The suit claimed Amazon inflated prices, limited consumer choice, and blocked potential rivals. Portions of that case were dismissed last year, but a trial is scheduled for 2027.