Amazon has reached a $2.5 billion settlement with the US Federal Trade Commission (FTC), putting an end to a high-profile lawsuit accusing the company of tricking customers into subscribing to Prime and making it difficult to cancel. The agreement, announced this week, includes a $1 billion civil penalty and $1.5 billion in refunds to approximately 35 million customers affected by what the FTC described as “deceptive” design practices.
For those who are unfamiliar, the lawsuit was originally filed in 2023, accusing Amazon of using dark patterns, or manipulative interface designs, to entice users to sign up for Prime. The FTC claimed that customers were frequently presented with misleading options, such as buttons indicating that they were declining Prime benefits when they were actually agreeing to sign up. Once enrolled, users reportedly encountered a deliberately confusing cancellation process, with multiple steps designed to discourage them from cancelling their subscriptions.
According to FTC Chairman Andrew Ferguson, Amazon used “sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for them to end their subscription.”
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The settlement terms include: Amazon must redesign the Prime enrolment process. In place of vague or misleading prompts, the company must provide a clear and conspicuous button to decline Prime. Cancellations must also be simplified to follow the same process as signing up, eliminating the maze of additional steps that the FTC claimed violated consumer protection laws. Amazon will also have to clearly display Prime’s pricing, auto-renewal policies, and cancellation terms upfront.
Amazon has stated that it has always followed the law and that the settlement enables it to continue innovating for customers. It also stated that it worked to improve the clarity and simplicity of sign-ups and cancellations.