Amazon has agreed to pay $2.5 billion to settle allegations that it tricked millions of customers into signing up for Prime and made it difficult for them to cancel their subscriptions.
As part of the settlement—one of the largest in a Federal Trade Commission case—Amazon will pay up to $51 to each eligible customer.
In the lawsuit, first filed by the Federal Trade Commission in 2023, the agency accused Amazon of tricking people into automatically renewing Amazon Prime subscriptions through “manipulative, coercive, or deceptive user interface design.” The lawsuit says Amazon is also making it harder for people to opt out.
The trial in the lawsuit brought by the Biden administration began this week in Seattle. The settlement, announced Thursday, is the latest example of the federal government trying to rein in the power of big tech companies.
“Today, we are putting billions of dollars back into the pockets of Americans and making sure Amazon never does this again,” Federal Trade Commission Chairman Andrew Ferguson said in a statement. “The Trump-Vance FTC is committed to fighting back when companies try to defraud ordinary Americans out of their hard-earned wages.”
Amazon did not admit guilt and agreed to a settlement.
Mark Blafkin, an Amazon spokesman, said the company and its executives have “always complied with the law, and this agreement allows us to move forward and focus on innovation for customers.”
“We are working hard to make it clear and simple for customers to both sign up for and cancel their Prime membership, and to offer significant value to our many millions of loyal Prime members around the world,” he said in a statement.
As part of the settlement, Amazon agreed to pay a $1 billion civil penalty and $1.5 billion to provide relief to approximately 35 million customers who were signed up for Prime without their consent or had trouble canceling their subscriptions, according to an FTC press release.
Under the agreement, Amazon will also have to make design changes, including clearly providing a button to opt out of Prime instead of having customers click “No, I don't want free shipping.”
Consumers will also have the option to quickly cancel their Prime membership without it being “complicated, costly or time-consuming.”
Amazon will now have to create a website that will provide consumers with information about the settlement, their rights and instructions on how to file a claim to get their money.
The company is also required to send a claim form to all eligible customers who were enrolled in Prime without their consent or were unable to cancel their subscription between June 23, 2019 and June 23, 2025.
In some cases, customers do not need to file a claim. Under the agreement, Amazon will automatically pay eligible customers up to $51 if they signed up for Amazon Prime through a “distressed sign-up flow” and used no more than three Prime benefits in a 12-month period.
The “challenge sign-up process” includes signing up through any Prime decision page, delivery option selection page, Prime Video sign-up or one-page checkout, the order states.
Tech companies are trying to strengthen their relationships with President Trump, but his administration has also criticized tech giants like Amazon.
In April, White House press secretary Caroline Leavitt accused Amazon participation in a “hostile and political act” after Punchbowl News said the company planned to display the cost of Trump's tariffs next to some products on its website. Amazon then released a statement saying the proposal “has never been approved and will not be implemented.”
Ferguson also weighed in on big tech companies, raising concerns about consolidation, censorship and data security.
Under the Biden administration, Federal Trade Commission Chairwoman Lina Khan has pushed for antitrust enforcement against big tech companies, including Amazon, Meta and Microsoft.
The first Trump administration also targeted big tech companies. The US Department of Justice has sued Google, accusing the company of illegally maintaining a monopoly in online search. A federal judge ruled that Google violated antitrust laws, but later this year freed the company from the requirement to sell the Chrome browser.
Amazon Prime is a subscription service that costs $14.99 per month and provides users with benefits such as free shipping and access to content such as movies and TV shows. There are about 197 million Prime members in the U.S. this year, according to Amazon. Consumer Intelligence Research Partners. In 2024, subscription revenue was more than $44 billion.
Some analysts don't think the settlement will slow Amazon's growth.
Zach Stambor, a senior analyst at eMarketer, said in a statement that the payout is only a small portion of what Amazon receives from subscription revenue. And Amazon Prime's perks are still enough to attract consumers.
“Amazon may have made it easier to cancel Prime, but the program is still deeply ingrained in most American households,” he said.
Amazon shares fell about 1% on Thursday.
