Amazon, FTC Reach $2.5 Billion Deal in Prime Subscription Case

Core Points - Amazon.com Inc. has agreed to pay $2.5 billion in penalties and refunds to settle a lawsuit by the US Federal Trade Commission (FTC) regarding misleading practices related to its Prime subscription service [1][4] - The settlement includes $1 billion in civil penalties and $1.5 billion in customer refunds, with customers potentially receiving refunds of up to $51 [1][6] - The FTC described the settlement as "historic," marking one of the largest in the agency's history [6] Company Conduct - A US District Judge found Amazon's conduct illegal for collecting customers' billing information before fully disclosing the terms of Prime [3] - The FTC's lawsuit claimed Amazon's tactics violated a 2010 law aimed at protecting online shoppers [4] - As part of the settlement, Amazon and two executives will be prohibited from engaging in deceptive conduct regarding Prime subscriptions for a period of 10 years [4] Financial Impact - Amazon's subscription services revenue reached $12.2 billion in the quarter ended June 30, reflecting an 11% increase from the previous year [8] - As of March, approximately 196 million people in the US held Prime memberships, a 9% increase from the previous year [7] - Prime members pay $139 annually or $15 monthly for various benefits, contributing significantly to Amazon's revenue [7]