Amazon Settles with FTC for $2.5 Billion Over Prime Enrollment Practices
In a landmark ruling that has sent ripples through the tech industry, Amazon has agreed to pay a staggering $2.5 billion to settle Federal Trade Commission allegations regarding its Prime membership program. The settlement, announced on Thursday, September 25, 2025, includes a record-breaking $1 billion civil penalty—the largest ever imposed by the FTC for a rule violation—and an additional $1.5 billion earmarked for consumer refunds. The case centers on claims that Amazon deliberately enrolled millions of customers into Prime memberships without clear consent and then made the cancellation process unnecessarily difficult. “The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription,” explained FTC Chairman Andrew Ferguson in the announcement, adding that the settlement is “putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
The settlement comes as a resolution to a complaint filed by the FTC in 2023, and follows a recent ruling by a federal judge in Seattle that Amazon had violated online shopper protection laws by collecting payment information before fully disclosing Prime terms. According to the FTC’s investigation, Amazon employed what are commonly known as “dark patterns”—confusing checkout flows and deceptive user interfaces designed to nudge shoppers into signing up for memberships they didn’t intend to purchase. The agency further alleged that Amazon deliberately created a complex, multi-step cancellation process that frustrated customers attempting to end their subscriptions. It’s worth noting that this case is entirely separate from the FTC’s ongoing and potentially more consequential antitrust lawsuit against Amazon regarding the company’s dominant role in online retail and marketplace services.
Under the terms of the settlement, Amazon will be required to implement “meaningful changes” to both its Prime enrollment and cancellation processes. The company must redesign its enrollment interface to include clearer disclosures about membership terms and provide a “clear and conspicuous button” allowing customers to decline Prime membership. Interestingly, the settlement specifically prohibits Amazon from using a button that says, “No, I don’t want Free Shipping”—language that the FTC likely viewed as manipulative. Additionally, Amazon will be subject to independent compliance monitoring to ensure adherence to these new requirements. The FTC estimates that approximately 35 million consumers will be eligible for refunds from the $1.5 billion consumer redress fund, representing a significant portion of Amazon’s Prime subscriber base.
Despite agreeing to the massive settlement, Amazon has not admitted to any wrongdoing. In a carefully worded statement, the company maintained that “Amazon and our executives have always followed the law” and characterized the settlement as an opportunity to “move forward and focus on innovating for customers.” The tech giant further asserted that many of the changes referenced in the FTC’s press release are ones that Amazon had already implemented in recent years. “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,” the company stated, defending its practices while simultaneously agreeing to overhaul them.
Prime memberships, which currently cost $139 per year or $15 per month, represent a significant revenue stream for Amazon. Subscribers receive benefits including discounted shipping, video and music streaming services, and various other perks. While Amazon doesn’t publicly disclose specific Prime membership figures, Consumer Intelligence Research Partners estimates that approximately 197 million Amazon customers held Prime memberships as of March 2025—a 7% increase from the previous year. The company’s subscription services revenue, which includes Prime memberships, reached $12.2 billion in its most recent quarter, reflecting a 12% year-over-year growth and accounting for roughly 7% of Amazon’s overall revenue. This settlement, while substantial, represents only a small fraction of Amazon’s financial might, as the company maintains a market capitalization of nearly $2.4 trillion.
The resolution of this case marks a significant victory for the FTC in its ongoing efforts to regulate big tech companies and protect consumer rights in the digital marketplace. The unprecedented size of the penalty signals a clear message to other subscription-based businesses about the potential consequences of employing deceptive enrollment tactics or creating unnecessarily complicated cancellation processes. For Amazon, while the financial impact may be relatively minimal given its enormous resources, the settlement requires substantive changes to Prime enrollment procedures that could potentially affect conversion rates and membership growth. As consumers become increasingly aware of their rights and regulatory bodies grow more assertive in enforcing them, this case may represent a turning point in how digital subscriptions are marketed and managed across the e-commerce landscape. Despite this setback, Amazon’s stock experienced only a slight dip following the announcement, suggesting that investors remain confident in the company’s long-term prospects despite this regulatory challenge.
