WASHINGTON—The Federal Trade Commission announced a landmark settlement with Amazon.com, Inc. and two of its executives, resolving claims the company deceptively enrolled millions of consumers in Prime memberships and deliberately made cancellations difficult. Under the order, Amazon must pay a $1 billion civil penalty, return $1.5 billion in refunds to affected consumers, and halt the unlawful enrollment and cancellation practices tied to Prime.
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said FTC Chairman Andrew N. Ferguson. “The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription. Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again. The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
The FTC has charged Amazon and several Amazon executives with knowingly misleading millions of consumers into enrolling in Prime, violating the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA). The FTC alleged Amazon created confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge. Compounding these deceptive enrollment practices, Amazon also created a complex and difficult process for consumers seeking to cancel their Prime subscription, with the goal of preventing consumers from cancelling Prime.
Amazon documents discovered in the lead up to trial showed that Amazon executives and employees knowingly discussed these unlawful enrollment and cancellation issues, with comments like “subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer.”
The historic monetary judgment contained in the settlement is only the third ROSCA case in which the FTC has obtained a civil penalty. It includes:
- A $1 billion civil penalty, which is the largest ever in a case involving an FTC rule violation
- $1.5 billion in consumer redress, providing full relief for the estimated 35 million consumers impacted by unwanted Prime enrollment or deferred cancellation. This is the second-highest restitution award ever obtained by FTC action.
Additionally, the settlement requires Amazon to stop their unlawful practices and make meaningful changes to the Prime enrollment and cancellation flows by:
- including a clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, “No, I don’t want Free Shipping”
- Including clear and conspicuous disclosures about all material terms of Prime during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures
- Creating an easy way for consumers to cancel Prime, using the same method that consumers used to sign up. The process cannot be difficult, costly, or time-consuming and must be available using the same method that consumers used to sign up
- Paying for an independent, third-party supervisor to monitor Amazon’s compliance with the consumer redress distribution process.