Amazon agrees to $2.5 billion FTC settlement over Prime ‘dark patterns’
Deal includes $1.5 billion in refunds to 35 million customers and $1 billion penalty; company denies wrongdoing but agrees to stricter rules on subscriptions.
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Amazon has agreed to pay $2.5 billion to settle a Federal Trade Commission (FTC) lawsuit that accused the tech giant of tricking millions of consumers into signing up for unwanted Prime memberships and making it unnecessarily difficult to cancel.
The settlement, announced on September 25, according to a CNBC report, ends a federal trial in Seattle just days after opening arguments began. By settling, Amazon avoids the risk of a jury verdict that could have imposed even greater financial damages.
Under the terms, Amazon will pay a $1 billion civil penalty and refund $1.5 billion to roughly 35 million customers who were affected by what the FTC described as “unwanted Prime enrollment or deferred cancellation.” Eligible users will receive up to $51 within 90 days.
The deal, the report adds, prohibits Amazon from misrepresenting Prime’s terms and requires the company to obtain clear consent before charging users. It also mandates simple, transparent cancellation processes. The FTC said the restrictions extend to Prime division head Jamil Ghani and senior executive Neil Lindsay, who will be barred from any unlawful conduct tied to subscriptions.
Amazon, while agreeing to the settlement, admitted no wrongdoing. “Our executives have always followed the law, and this settlement allows us to move forward and focus on innovating for customers,” spokesperson Mark Blafkin said. The company also noted that many of the changes required by the FTC had already been implemented years earlier.
The penalty ranks among the largest ever imposed by the FTC, second only to the $5 billion fine levied against Facebook (now Meta) in 2019 for privacy violations.
However, it amounts to only 0.1% of Amazon’s nearly $2.4 trillion market capitalization. The company’s shares rose slightly following the announcement.
