Amazon will pay a record $2.5 billion settlement with the Federal Trade Commission (FTC), one of the largest consumer protection cases in the history of the United States.
The settlement concludes a two-year court fight charging that Amazon misled millions of consumers into enrolling in its Prime membership program and then made it hard to cancel.
Under the terms of the settlement, as announced by the FTC, the company will pay a $1 billion civil penalty and issue $1.5 billion in refunds to about 35 million customers. This is the largest ever civil penalty for violation of an FTC rule and the second-largest restitution order the agency has won.
The timing of the deal is significant, it occurred just days into the Amazon versus FTC trial. The lawsuit, filed in 2023 during the Biden administration, focused on allegations that Amazon utilized “subscription traps” to trick consumers during the Prime sign-up process. FTC Chairman Andrew Ferguson called the result “a record-breaking, monumental win for the millions of Americans who are fed up with deceptive subscriptions that seem impossible to cancel.”
Ferguson further added that evidence showed that Amazon knowingly developed confusing platforms to trick customers into enrolling in Prime and then made it extremely difficult to cancel.
Amazon insisted on its innocence, though. Spokesman Mark Blafkin said that the company and executives “have always complied with the law,” going on to say that the settlement lets Amazon “move on and continue to innovate for customers.” He noted that Amazon strives to make Prime membership and cancellation easy and that Prime still delivers significant value globally.
As part of the settlement agreement, Amazon made a number of concessions. It will cease using misleading buttons such as “No, I don’t want Free Shipping” while checking out, and it has to disclose Prime’s conditions clearly while signing up. Amazon was also compelled by the FTC to give clear options to cancel.
Prime continues to be one of Amazon’s most lucrative businesses. At $14.99 per month or $139 annually, the program generated $44 billion in subscription revenue in 2024, according to Emarketer analyst Zak Stambor. With an estimated 197 million U.S. subscribers as of March 2025, Prime has expanded far beyond its origins as a shipping perk, now offering streaming, grocery delivery, fuel discounts, and exclusive deals. Stambor commented that while the settlement would make cancelling more streamlined, it is not likely to dampen Prime’s stranglehold.
Former FTC Chairman Lina Khan, who led the initial lawsuit, attacked the settlement in a social media posting. She contended that Amazon “saved itself from probably being found liable” by settling at the beginning of the trial. Khan labeled the $2.5 billion fine “a drop in the bucket for Amazon” and a relief for executives, she asserts, who acted knowingly to harm consumers.
For consumers, the FTC states refunds will start rolling out in the months ahead. The case is a reminder of increasing examination of subscription services and the pressure for increased consumer protections online.
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