Amazon to pay $2.5B in historic FTC settlement

Amazon has agreed to pay $2.5 billion to settle charges of knowingly misleading customers and using deceptive practices, according to a Thursday announcement from the Federal Trade Commission. Amazon enrolled millions of customers in Amazon Prime without their consent and made it unnecessarily difficult for them to cancel, the FTC alleged. About $1 billion of the settlement constitutes a civil penalty that is now the largest ever awarded for an FTC rule violation. The remaining $1.5 billion—now the second-highest FTC restitution award—will be returned to affected customers, the commission noted.

How were customers deceived? Amazon used deceptive web interfaces to mislead customers into unknowingly subscribing to Prime, according to the FTC. The company also made canceling a Prime membership difficult in hopes of keeping customers enrolled. According to FTC Chairman Andrew Ferguson, regulators are putting billions of dollars back into consumers’ pockets and ensuring the problem never happens again.

Along with the fine, Amazon must add a distinct button for customers to decline Prime enrollment offers and include clear disclosures about the terms of a Prime membership during the enrollment process. The company must also streamline methods for canceling a Prime subscription and pay a third party to monitor Amazon’s compliance with the return payments to affected customers.

What has Amazon said? The settlement will allow Amazon to move forward and focus on innovating for customers, the company said in a Thursday statement. It said Amazon has always followed the law and worked hard to make Prime sign-ups and cancellations clear and simple. 

Dig deeper: Listen to Nick Eicher and David L. Bahnsen’s report on The World and Everything in It about the Justice Department’s antitrust lawsuit against Amazon.