Amazon to pay historic $2.5 billion settlement for allegedly tricking customers into signing up for Prime

By Jordan Valinsky, CNN

New York (CNN) — Amazon is paying a historic $2.5 billion settlement with the Federal Trade Commission, the agency announced Thursday, ending a two-year dispute over allegations the company tricked consumers into signing up for its Prime subscription service and then made it hard to cancel.

As part of the agreement, Amazon will pay a $1 billion civil penalty and provide $1.5 billion in refunds to an estimated 35 million customers that were “harmed by their deceptive Prime enrollment practices,” the agency said in a press release.

The agency said this is the largest civil penalty in a case involving an FTC rule violation. It’s also the second-highest restitution award obtained by the FTC.

The settlement comes just a few days into a trial between the FTC and Amazon. The lawsuit was filed in 2023 under the Biden administration over the company’s cancellation policies.

“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said FTC Chairman Andrew Ferguson.

“The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription,” he added.

“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” said Amazon spokesperson Mark Blafkin in a statement. “We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world.”

The company and executives also did not admit to any wrongdoing, and said it has made the changes outlined by the FCC.

That includes the fact that Amazon can no longer have a “No, I don’t want Free Shipping” button. The FTC also said the company needs to include “clear and conspicuous disclosures” about the terms of Prime during enrollment process and have “easy ways” to cancel the program.

Prime, which costs $14.99 per month or $139 annually, is a hallmark of the company’s offerings and generates billions of dollars. The service initially started as an add-on for fast delivery. Since then, Prime has ballooned into a multi-pronged service that offers streaming entertainment, grocery delivery, fuel and food delivery perks, as well as subscriber-only deals.

Amazon doesn’t disclose how many US subscribers it has, but a third-party analysis from Consumer Intelligence Research Partners estimates that it has 197 million customers as of March 2025.

The $2.5 billion payout represents 5.6% of Prime’s subscription revenue last year, which raked in $44 billion, according to Emarketer analyst Zak Stambor. He added that the settlement might “streamline Prime’s cancellation process, but it won’t dent the program’s dominance.”

Former FTC chair Lina Khan, who ran the agency when the lawsuit was filed, said in a social media post on Thursday that a settlement just a few days into Amazon’s jury trial rescued the company “from likely being found liable for having violated the law,” allowing it to “pay its way out.”

“A $2.5 billion fine is a drop in the bucket for Amazon and, no doubt, a big relief for the executives who knowingly harmed their customers,” Khan said.

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