Majority Of Amazon's $2.5 Billion FTC Settlement Is Tax Deductible

Core Points - The Federal Trade Commission (FTC) has reached a historic $2.5 billion settlement with Amazon over allegations of deceptive Prime subscription practices, including enrolling consumers without consent and complicating the cancellation process [2][3] Financial Implications - Amazon is required to pay a $1 billion civil penalty, the largest ever for an FTC rule violation, and provide $1.5 billion in refunds to approximately 35 million affected consumers [3] - The $1 billion penalty must be paid in two installments: $500 million within 14 days and the remaining $500 million due in 18 months [9] - The $1.5 billion in refunds is expected to be deductible as business expenses, potentially reducing Amazon's after-tax cost [7][9] Compliance Changes - The settlement mandates Amazon to implement significant changes to its Prime enrollment and cancellation processes, including a clear option for customers to decline Prime [3] - Amazon can no longer use misleading buttons that complicate the cancellation process, ensuring easier access for consumers wishing to cancel their Prime membership [3]