Amazon Fined $2.5 Billion In Settlement for Tricking Prime Customers

Amazon has agreed to pay a $2.5 billion settlement after the FTC determined that they have been tricking Prime customers into subscribing and then keeping their subscription.

Over the years, Amazon Prime has quickly grown to play a crucial role in the lives of many Americans, offering free shipping, streaming and entertainment, grocery delivery, exclusive shopping deals, gaming, online storage, and food perks. Amazon has never officially confirmed how many customers the service has, but firms have estimated that Prime has around 197 million subscribers in the United States and around 240 million worldwide. That makes it the world's second-largest subscription service after Netflix, which has around 300 million subscribers.

However, Amazon has just entered a major settlement with the FTC after being accused of using deceptive subscription practices and making it extremely tough for customers to cancel their subscriptions.

The settlement comes after a two-year long case after the Federal Trade Commission announced an antitrust lawsuit regarding their subscription practices in 2023. The FTC claimed that Amazon had used "manipulative, coercive, or deceptive user-interface designs" to trick people into signing up for Prime and renewing their subscription. They also alleged that Amazon used a "labyrinthine" cancelation process to deter Prime subscribers from canceling their subscriptions.

Furthermore, the FTC found evidence that executives were completely aware of these tactics, and one former employee on the user experience team testified in court that he had found the practices to be "misleading" and "confusing." Nevertheless, Amazon argued that they had not used any sort of deceptive tactics and had spent millions of dollars on improving the user experience and increasing transparency.

Now, Amazon has agreed to settle the case with a payout– the corporation will pay a $1 billion civil penalty and an additional $1.5 billion in refunds to customers affected by their tactics.

They have also been required to change their subscription signup and cancelation methods to make the process easier, and the FTC is requiring them to include the exact terms of Prime on the signup page to be more transparent. Some of these changes include removing the "No, I don't want Free Shipping" button, adding a clear button that allows customers to decline Prime, and paying for a third-party supervisor to review their practices.

However, Amazon has not admitted to the crime, stating that they "have always followed the law" and they simply settled to be able "to move forward and focus on innovating for customers."

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Image credit to Amazon Prime