Amazon.com has agreed to a settlement of $2.5 billion with the U.S. Federal Trade Commission (FTC) to resolve allegations that it enrolled customers in its Prime subscription service without their consent. This settlement, announced on Thursday, comes as the FTC was set to present its case in a Seattle federal court regarding what it described as "sophisticated subscription traps" utilized by Amazon to manipulate consumers.
The $2.5 billion sum includes $1.5 billion designated for a fund to reimburse approximately 35 million consumers who experienced unwanted Prime enrollments or difficulties in cancelling their subscriptions. Notably, Amazon will not admit to any wrongdoing as part of this settlement.
In addition to financial payments, Amazon has agreed to implement changes to its subscription process. The company will introduce a more visible option for customers to decline Prime enrollment and simplify the cancellation process. Furthermore, Amazon will enhance the clarity of subscription terms during the sign-up phase and will fund an independent third-party to oversee compliance with these new measures.
The probe into Amazon's subscription practices has been ongoing since the Trump administration and culminated in this case under President Biden. The FTC cited internal Amazon communications that indicated awareness among employees of problematic enrollment practices, with phrases like "subscription driving is a bit of a shady world."
Amazon Prime, which launched in 2005, has become a significant aspect of Amazon's business, boasting over 200 million members in the U.S. alone. The settlement marks one of the largest restitution amounts ever secured by the FTC. Concurrently, the Competition Bureau in Canada is investigating Amazon's pricing policies, raising additional scrutiny of the company's practices.