Amazon will pay $2.5 billion in refunds to settle a Prime issue.

Amazon’s $2.5 Billion Settlement with FTC

Amazon has agreed to a significant $2.5 billion settlement following allegations that it registered Prime subscribers without their consent. The Federal Trade Commission (FTC) made the announcement on Thursday, detailing that Amazon’s payment includes a $1 billion civil penalty alongside $1.5 billion in refunds to impacted customers.

FTC Chairman Andrew Ferguson stated, “Today, we’re bringing billions back to Americans’ pockets and ensuring Amazon cannot repeat this behavior.” He also emphasized the FTC’s commitment to fighting against businesses that deceive everyday Americans.

Details of the Settlement

The settlement marks an unprecedented action, as consumers must have maintained their Prime membership from June 23, 2019, through June 23, 2025, to be eligible for refunds. Refunds will be issued in two phases, as reported by Axios. The first group will automatically receive payments within 90 days, while the second group needs to fill out a form after the initial payout period.

For the first group, those who signed up for Prime through the contested registration process and utilized three main benefits within a year will see payments capped at $51.

Changes to Prime Membership

The second group includes customers who registered through the problematic process or attempted to cancel their Prime membership within five years. These customers qualify only if they didn’t access more than ten major benefits during their registration. According to Axios, those in this group will get a form from Amazon within a month following the automatic payments, and Amazon will then have up to 30 days to decide on claims, again with a cap at $51.

Future Compliance and Customer Experience

The settlement also mandates changes in Amazon’s registration procedures. This includes implementing a straightforward option to decline Prime membership, clearly stating Prime terms during registration, and establishing a simple process for cancellations. Additionally, Amazon will need to engage third parties to monitor compliance with the settlement.