Amazon reaches $2.5 billion settlement over FTC's Prime lawsuit
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Amazon.com will pay $2.5 billion in penalties and refunds to settle allegations that it enrolled customers for its Prime subscriptions without their consent and made it difficult for them to cancel.
Why it matters: The settlement demonstrates that Trump administration regulators are willing to stand up to Big Tech even as their CEOs woo the president.
Driving the news: The settlement came as the trial of the Federal Trade Commission's lawsuit just got underway in U.S. District Court in Seattle.
Under the terms of the agreement, as provided by the FTC, Amazon will pay:
- a $1 billion civil penalty, and provide
- $1.5 billion in refunds back to consumers.
Amazon has also agreed to:
- Include "a clear and conspicuous button for customers to decline Prime." That's instead of "No, I don't want Free Shipping."
- Have better disclosures.
- Make a method to cancel Prime that's similar to how one signs up.
- Pay for an independent monitor to check on Amazon's compliance.
Of note: These steps are ones that Amazon says that it has already made —years ago, in a number of cases —and that the settlement requirements reflect a sign-up and cancellation process that has been in place for several years.
What they're saying: "Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel," FTC chair Andrew Ferguson said in a statement.
- Amazon spokesperson Mark Blafkin said in a statement that "Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers."
- "We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world," he said.
Catch up quick: The FTC lawsuit was filed in June 2023 under the Biden administration and FTC chair Lina Khan. Opening arguments in the trial began on Tuesday, CNBC noted.
- Thursday's settlement also includes two executives whom the FTC sued along with Amazon. There was no admission of guilt by the company or the executives.
- The FTC and 18 state attorneys general filed a much broader lawsuit against Amazon in September 2023, contending that the e-commerce giant uses "a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power." That case is expected to come to trial in 2027.
Our thought bubble, via Axios' Ashley Gold: Yes, it's a high price tag, but the settlement is good news for Amazon. It does not have to continue with the trial and risk being found liable for wrongdoing.
Editor's note: This report was updated with additional comments from Amazon.
