Amazon Settles Lawsuit Over 'Prime Sign-Up and Cancellation Tactics' for $2.5 Billion

Includes Civil Penalty and Customer Refunds
Former FTC Chair: "A Drop in the Bucket for Amazon"

Amazon, the world's largest e-commerce company, has agreed to pay $2.5 billion to settle a lawsuit filed by the U.S. Federal Trade Commission (FTC), which accused the company of deceiving customers into signing up for its Prime membership and making it difficult for them to cancel.

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The FTC announced on the 25th (local time) that Amazon had agreed to pay $2.5 billion to settle the lawsuit. Under the settlement, Amazon will pay $1 billion to the FTC as a civil penalty and refund a total of $1.5 billion to approximately 35 million customers who were either unintentionally enrolled in the membership or suffered losses due to delayed cancellations.

Additionally, Amazon has agreed to clearly and conspicuously disclose the terms during the membership sign-up process. The company must also obtain explicit consent from consumers before charging any subscription fees and provide an easy way to cancel subscriptions. Amazon stated that this settlement will allow the company to focus on its customers, adding, "We are committed to providing clear and simple procedures for customers to sign up for or cancel memberships, and we deliver significant value to millions of members worldwide."

Launched in 2005, Amazon Prime has grown into a popular subscription service with more than 200 million members worldwide. The annual fee is $139, and benefits include free shipping and access to streaming content.

The FTC filed the lawsuit in June 2023, claiming that Amazon misled customers into signing up for memberships without their knowledge or consent by making payment details and free trial conditions unclear, and by complicating the cancellation process, thereby violating the FTC Act and the Restore Online Shoppers' Confidence Act.

Some observers say that the settlement amount will not have a significant impact on Amazon. Lina Khan, former FTC Chair who initiated the lawsuit during the Biden administration, wrote on X (formerly Twitter) that the $2.5 billion settlement is "a drop in the bucket" for Amazon and would be "a major relief for executives who intentionally harmed customers."

On the New York Stock Exchange that day, Amazon shares closed at $218.15, down 0.94% from the previous day.

This content was produced with the assistance of AI translation services.