Amazon has reached an agreement on Thursday with the Federal Trade Commission (FTC) of the United States to pay $2.5 billion, the largest civil penalty in the agency's history, in exchange for not going to trial for deceiving its customers into signing up for its Prime service, which offers various services, from streaming to cost-effective and faster deliveries, while simultaneously creating a confusing cancellation process.
Prime, celebrating its 20th anniversary in 2025, has over 200 million users worldwide and is a significant source of revenue. In the US, it is offered for $139 and contributed $44 billion directly to the company's coffers last year. Prime users are the most loyal and spend the most.
The FTC's investigation alleges that Amazon intentionally designed its interface to make users subscribe without clear terms and costs. Those wanting to cancel faced significant difficulties. The company changed the process in 2023, just as the case formally began, but before that, users had to navigate through up to four different web pages and choose from 15 options to cancel, according to the investigation.
Jeff Bezos' company will pay a $1 billion fine and allocate another $1.5 billion to create a fund to compensate consumers. The agreement, signed as the jury trial in Seattle was commencing, could have cost the e-commerce giant much more if lost. It also includes modifying the service platform to make cancellation much more intuitive and faster.
Amazon has settled with the regulator without admitting any wrongdoing and maintains that the cancellation mechanisms were not complicated. However, the FCC states that 40 million people were affected by the reported situation. Customers who have used three or fewer Prime benefits "during any 12-month period between June 2019 and June 2025 are automatically eligible for a $51 payment," according to the agreement. Those who have used Prime benefits less than 10 times during the same period can receive the same amount but through a claims process.
"Amazon and our executives have always complied with the law, and this agreement allows us to move forward and focus on innovating for our customers," said Mark Blafkin, the company's spokesperson, in a statement. "We work hard to make it clear and simple for customers to sign up or cancel their Prime membership and to offer substantial value to our millions of loyal Prime members worldwide. We will continue to do so and look forward to the benefits we will offer them in the coming years."