Amazon has agreed to a significant $2.5 billion settlement, which the Federal Trade Commission (FTC) has termed “historic.” This settlement comes in response to claims that the company made it overly challenging for customers to cancel their services.
FTC Chairman Andrew N. Ferguson highlighted the impact of this settlement, saying, “Today, we’re bringing billions of dollars back to Americans’ pockets and making sure Amazon never does this again.”
What does the settlement entail?
As part of the agreement, Amazon will update certain interfaces and language when promoting Prime subscriptions. For instance, customers wishing to opt-out used to face a button that said, “No, I don’t want free shipping.” The FTC stated that this specific button can no longer be used.
Additionally, when signing up for Prime, customers must now receive clear information regarding costs and recurring fees, ensuring they are fully informed before making their choices.
Amazon will also pay a $1 billion civil penalty and provide a $1.5 billion refund to customers affected by these misleading registration practices.
Who qualifies for the refunds?
Approximately 35 million Amazon customers have been identified as having been misled. According to court documents, some of these individuals found themselves automatically billed an amount up to $51 due to the misleading registration process. To be eligible for compensation, customers must meet specific criteria regarding the sign-up dates (from June 23, 2019, to June 23, 2025), efforts to cancel, and usage of benefits.
Amazon has committed to informing qualifying consumers about the settlement and is working on a portal for other customers to file claims, though no specific details about the process have been released yet.
Reactions from former FTC leadership
The settlement comes just as Amazon’s case approached trial. While Ferguson framed the resolution as historic for the FTC, former chair Lina Khan raised questions about the rationale behind this development. She expressed her thoughts on social media, noting that after significant victories, settling now seemed illogical, especially when the trial was imminent.
Khan indicated that there was substantial evidence against Amazon and suggested that the FTC might have prevailed if they had proceeded with the trial. She noted, “This week marked the beginning of a historic trial where American citizens would learn more about Amazon’s business practices and whether laws had been broken.” Her comments shed light on her belief that the $2.5 billion settlement, though large, was a mere fraction of what Amazon could face for its actions.
The lawsuit against Amazon originated in 2023, reflecting ongoing efforts by the Biden administration to safeguard consumers from unfair subscription practices. In line with this, the FTC recently introduced a “Click-to-Cancel” rule aimed at preventing misleading practices regarding subscriptions with automated fees. However, shortly before this rule was set to be enforced in July 2025, a U.S. Court of Appeals struck it down, arguing that the FTC had not adequately assessed the preliminary costs involved.
