Amazon has agreed to pay $2.5 billion to settle FTC allegations that the company “tricked and trapped” consumers into signing up for Prime memberships and hindered their attempts to cancel the subscription. FTC Chairman Andrew Ferguson said, “The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
CNBC reports that Amazon has reached a $2.5 billion settlement with the FTC over allegations that the company engaged in deceptive practices related to its Prime subscription program. The settlement, announced on Thursday, comes just three days into the trial between Amazon and the FTC in a Seattle federal court.
The FTC had filed its lawsuit against Amazon in June 2023, accusing the e-commerce giant of deceiving tens of millions of customers into signing up for Prime memberships and making it difficult for them to cancel their subscriptions. The lawsuit also sought to hold three senior Amazon executives individually liable if the jury sided with the FTC.
Under the terms of the settlement, Amazon will pay a $1 billion civil penalty to the FTC and refund $1.5 billion to an estimated 35 million customers who were affected by what the FTC called “unwanted Prime enrollment or deferred cancellation.” The company has not admitted any wrongdoing in agreeing to the settlement.
The agreement prohibits Amazon from misrepresenting the terms of Prime and requires the company to make clear and conspicuous disclosures about the program’s terms during the enrollment process. Additionally, Amazon must obtain consumers’ express consent before charging them for a subscription and provide an easy way for users to cancel their memberships.
As part of the settlement, two Amazon executives, Prime boss Jamil Ghani and Neil Lindsay, a senior vice president in the company’s health division who previously held a role in the Prime business, will be prohibited from engaging in unlawful conduct related to the allegations.
FTC Chairman Andrew Ferguson called the penalty a “monumental win” for the agency under the Trump administration, stating, “The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
The $2.5 billion penalty is one of the largest ever imposed by the FTC, second only to the $5 billion fine levied against Facebook (now Meta) in 2019 for violating consumers’ privacy. However, the fine represents only about 0.1 percent of Amazon’s current market cap of nearly $2.4 trillion.
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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