Amazon to Pay $2.5 Billion to Settle FTC Lawsuit Over Prime “Cancellation Trickery”

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Three days into trial, Amazon has agreed to pay $2.5 billion to settle a lawsuit from the Federal Trade Commission accusing the tech giant of duping consumers into signing up for Prime subscriptions, which some users were allegedly impeded from canceling.

The lawsuit, filed under the Biden administration in 2023 in the opening salvo against Amazon’s retail dominance, alleged the company adopted a “coercive” user interface to trick users into enrolling in automatically renewing memberships. It involved claims that some people intended to sign up solely for Prime Video, a lower-cost option.

Under the deal, reached on Thursday, $1.5 billion will go to eligible users, who can receive up to $51. The remainder of the settlement constitutes a fine.

The FTC detailed an intentionally deceptive subscription process on its website known as “dark patterns” to enroll consumers into Prime without consent. It faulted the company for presenting to users numerous opportunities to subscribe before they can place their order on the final checkout page. On desktop, consumers are presented with a prominent button to enroll in Prime and a “comparatively inconspicuous link” to decline, the suit alleged. On mobile, Amazon places the terms of Prime, like price and auto-renewal policies, at the very bottom of the page that’s not viewable unless users scroll down.

Prime is considered a vital part of Amazon’s retail dominance because it keeps users locked into the company’s marketplace by offering them perks, including access to Prime Video.

Although it’s possible to sign up for Prime Video alone, the FTC said the company hides the option in order to upsell consumers into paying for the higher-priced alternative. It also challenged the company refusing to offer users the ability to cancel their subscriptions on the Prime Video application or on the Amazon FireStick.

Amazon, which didn’t immediately respond to a request for comment, revamped its cancellation process for some subscribers after it was notified of the FTC investigation.

In recent years, users have increasingly been taking to court to challenge allegedly deceptive practices by Amazon. A proposed class action was filed against the company last month over a “bait and switch” in which the company allegedly misled consumers into believing they’ve purchased movies and TV shows when they’re only getting a license to watch, which can be revoked at any time.