Amazon has agreed to pay $2.5 billion to resolve allegations from the US Federal Trade Commission (FTC) that it misled millions of customers into signing up for its Prime subscription service. The settlement includes a $1 billion civil penalty (the largest ever imposed by the FTC) and $1.5 billion allocated for refunds to customers affected by the company’s enrollment and cancellation practices. The case focused on claims that the company made it easy for users to join Prime unintentionally and difficult for them to cancel, raising concerns about transparency and fairness in online subscription services.
The FTC’s lawsuit (filed in 2023) accused Amazon of using misleading practices to enroll consumers in Prime without their clear consent. The agency specifically pointed to a feature called the ‘Single Page Checkout’, which was in use from June 23, 2019, to June 23, 2025. According to the FTC, this feature often caused customers to sign up for Prime memberships by mistake. The complaint also highlighted an internal system known as ‘Iliad’, which allegedly made it unnecessarily complicated for users to cancel their subscriptions once they had been enrolled.
Meanwhile, as part of the settlement, around 35 million customers who were affected by these practices are eligible for refunds. Individuals who signed up through the Single Page Checkout and used fewer than three Prime benefits will automatically receive $51. Even customers who faced difficulties canceling their memberships can submit claims to receive additional compensation. The FTC clarified that these measures aim to reimburse affected consumers and ensure that future enrollment and cancellation processes are clear and accessible.
While Amazon did not admit to any wrongdoing as part of the agreement, the company has agreed to implement changes to its Prime enrollment and cancellation procedures. These changes include making the option to decline Prime membership during checkout more prominent and simplifying the cancellation process. As per the company, these steps are designed to improve transparency and make it easier for customers to manage their subscriptions. Importantly, the FTC also called this latest agreement a reminder to all tech companies about the need for clear communication and straightforward methods for consumers to opt out of subscription services.
This is not the first time Amazon has settled an FTC lawsuit by paying hefty penalties. Earlier in 2023, the company agreed to pay around $30 million to resolve a joint FTC-DOJ case over privacy violations involving its Alexa and Ring devices, following allegations that it mishandled children’s data in violation of the Children’s Online Privacy Protection Act (COPPA). Along with the financial penalty, Amazon was required to overhaul its data deletion practices and implement stricter privacy safeguards.
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