Amazon to Pay $2.5 Billion to Settle US Government Claims Over Prime Subscription Practices
Amazon has agreed to pay $2.5 billion (£1.9 billion) to settle claims by the US Federal Trade Commission (FTC) that it misled millions of consumers into signing up for its Prime membership program and deliberately made the cancellation process confusing and difficult.
The settlement, announced just days after a jury trial began in Seattle, represents the largest civil penalty ever secured by the FTC. Under the deal, $1.5 billion will go directly to consumer refunds, with millions of eligible Americans expected to benefit.
What the Settlement Means for Consumers
The FTC said approximately 35 million US consumers could be eligible for refunds. Those who were enrolled in Prime between June 2019 and June 2025 may receive up to $51 each.
Refunds will be issued automatically for consumers who used Prime benefits fewer than three times within a year of signing up. Others who used Prime fewer than 10 times in a year will need to submit a claim to receive compensation.
In addition, Amazon must overhaul its subscription system. The company will be banned from using manipulative checkout designs—such as pop-ups pressuring users to sign up with misleading buttons like “No, I don’t want free shipping”. The tech giant will also be required to introduce a straightforward cancellation process, making it easier for users to opt out of Prime when they no longer want the service.
How Amazon Prime Works
Amazon Prime is one of the world’s most popular subscription services, offering free two-day shipping, streaming video and music, exclusive discounts, and other benefits. In the US, Prime costs $139 per year (or $14.99 per month) and around £95 per year in the UK.
Hundreds of millions of people globally are Prime members, making it one of Amazon’s most profitable divisions. But this popularity has also drawn the attention of regulators, who argue that the company has at times used “dark patterns” to pressure customers into signing up.
FTC’s Case Against Amazon
The FTC accused Amazon of designing a system that steered customers into Prime memberships without proper consent. Examples included:
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Aggressive checkout pop-ups nudging customers toward Prime without making the terms clear.
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Automatic renewals after a “free” one-month trial without clear disclosure.
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Confusing cancellation pathways, which forced customers to go through multiple steps to cancel their subscriptions.
FTC Chairman Andrew Ferguson described the tactics as “sophisticated subscription traps.”
“Amazon used manipulative designs to trick consumers into enrolling in Prime, then made it exceedingly hard for them to cancel,” Ferguson said. “Today, we are putting billions of dollars back into Americans’ pockets and making sure Amazon never does this again.”
Amazon’s Response
While Amazon has not admitted wrongdoing, it agreed to settle the case to avoid further litigation. The company declined immediate comment on the settlement but has previously rejected the FTC’s allegations, insisting that customers “clearly understand the benefits and terms of Prime.”
Amazon also argued that most Prime members remain loyal because they genuinely value the service. However, the settlement indicates that regulators disagreed with Amazon’s defense and concluded that millions of consumers were unfairly affected.
Political and Regulatory Context
The lawsuit was initially filed during the Biden administration, led by then-FTC Chair Lina Khan, who has long been a critic of Amazon and other tech giants. Khan became well known for her push to expand antitrust scrutiny of Big Tech.
The case continued under President Donald Trump’s FTC appointee, Andrew Ferguson, who has also pursued an aggressive stance toward technology companies. His leadership ultimately brought the settlement to conclusion.
Internal Amazon documents cited by the FTC showed that company executives were aware of potential legal risks, with some employees acknowledging that “subscription driving is a bit of a shady world.”
Why This Matters
The $2.5 billion penalty is more than just a financial hit—it sets a precedent for how regulators may handle subscription-based services across industries. As more companies rely on recurring revenue models, the ruling sends a strong message that misleading practices and difficult cancellation processes will not be tolerated.
For Amazon, the case could also affect public trust. Prime remains central to Amazon’s retail and entertainment ecosystem, and ensuring transparency in how people sign up and cancel may be key to maintaining customer loyalty.
What Happens Next
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Refunds Distribution: The FTC will oversee refund payments, with automatic refunds for some consumers and a claims process for others.
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Amazon’s Compliance: The company must implement new systems to make Prime enrollment and cancellation clearer.
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Future Oversight: The settlement likely signals continued scrutiny of Amazon’s business practices, especially in e-commerce and digital services.
Conclusion
The FTC’s $2.5 billion settlement with Amazon is one of the most significant consumer protection victories in US history. It highlights the growing push by regulators to curb manipulative online practices and ensure fairness in digital marketplaces.
For millions of Prime users, the decision not only brings potential refunds but also promises a more transparent subscription process in the future. While Amazon maintains that it has always acted in the best interest of its customers, the scale of the penalty shows that regulators strongly disagreed.
This case may well reshape the way tech giants structure their subscription services—and could mark the beginning of tougher rules for the digital economy worldwide.