Amazon to Pay $2.5 Billion Settlement Over Enrollment Practices
Amazon.com is set to pay $2.5 billion in fines and payments to Prime subscribers as part of a settlement with the Federal Trade Commission (FTC). This comes after allegations that the company enrolled users in the subscription service without their consent. The FTC announced this decision on Thursday.
Out of the total, $1.5 billion will be allocated to a fund aimed at reimbursing eligible Prime subscribers. Interestingly, as part of this settlement, Amazon will not admit any wrongdoing.
Following the news, Amazon’s stock saw little change, and the company has not immediately commented on the matter.
In line with the settlement, Amazon has agreed to introduce a more visible button that allows customers to opt out of a Prime subscription easily, and they’ll also simplify the cancellation process. Furthermore, they’ll be required to disclose terms more transparently when users sign up, along with hiring a third-party entity to monitor compliance.
This settlement announcement came just days into a trial in Seattle, where the FTC laid out its accusations against Amazon.
Documents revealed before the trial indicated that Amazon’s executives had discussed problematic enrollment and cancellation practices, with some statements suggesting that “subscription driving is a bit of a shady world” and that pushing consumers into unwanted subscriptions could be considered “an unspoken cancer.”
The fund intended for reimbursements is expected to benefit roughly 35 million consumers affected by unwanted Prime enrollments or delays in cancellation.
Individual Prime subscribers who submit valid claims could receive payments of up to $51, and there might be additional compensation available.
FTC Chairman Andrew Ferguson mentioned that the evidence highlighted how Amazon employed manipulative tactics to get consumers to sign up for Prime and then made it quite challenging to unsubscribe.
This investigation into Amazon began during Donald Trump’s presidency and culminated in legal action while Joe Biden was in office.
Officials from the FTC noted that this settlement represents the second-largest restitution amount ever resulting from an FTC action, marking a significant success for their tech regulation efforts initiated during the Trump administration.
