Amazon Prime may promise lightning-fast shipping and countless perks, but according to U.S. federal regulators, millions of customers got more than they put in their shopping baskets. Even more troubling, in some cases they signed up without fully realizing it. Now the online giant is paying a massive price: a record-breaking $2.5 billion settlement. That includes $1.5 billion in refunds for Prime members and another $1 billion in civil penalties. The Federal Trade Commission (FTC) says Amazon tricked pe ...

Core Points - Amazon has reached a $2.5 billion settlement with the Federal Trade Commission (FTC) regarding allegations of deceptive practices related to Prime subscriptions [1][4] - The settlement includes a $1 billion civil penalty and $1.5 billion in refunds to approximately 35 million affected consumers [1][5] - The FTC described the settlement as a significant victory for consumers, aiming to prevent future deceptive subscription practices [4][5] Settlement Details - Amazon will pay up to $51 per customer with a valid claim [2] - The company did not admit any wrongdoing as part of the settlement [4] - The settlement is the second-largest in FTC history [9] Compliance Measures - Amazon must implement clearer language for declining Prime subscriptions and make it easier for customers to cancel their accounts [7][8] - The company is required to undergo third-party audits to ensure compliance with the settlement terms [8] - Two Amazon executives are mandated to refrain from unlawful conduct as part of the settlement [7] Background of the Case - The FTC's investigation into Amazon's practices began during President Trump's administration and led to a lawsuit filed in 2023 [6] - The agency accused Amazon of enrolling customers into Prime memberships without consent and complicating the cancellation process [6]

Core Viewpoint - Amazon has agreed to a $2.5 billion settlement with the FTC over allegations of deceptive practices related to Prime subscriptions, which includes a $1 billion civil penalty and $1.5 billion in refunds to affected consumers [1][5]. Group 1: Settlement Details - The settlement requires Amazon to pay a $1 billion civil penalty and provide $1.5 billion in refunds to approximately 35 million consumers harmed by its practices [1]. - Amazon must implement a clear option for customers to decline Prime enrollment and disclose subscription costs, billing dates, and cancellation procedures during the sign-up process [2]. - The company is mandated to simplify the cancellation process, allowing consumers to cancel Prime using the same method they used to sign up [2]. Group 2: Allegations and Evidence - The FTC's lawsuit claimed that Amazon employed confusing user interfaces to mislead consumers into enrolling in Prime without their consent and made cancellation difficult [1][3]. - FTC Chairman Andrew N. Ferguson stated that evidence showed Amazon used sophisticated subscription traps to manipulate consumers [3]. Group 3: Historical Context - This settlement is one of the largest in FTC history, following a $5 billion settlement with Facebook (now Meta) in 2019 for privacy violations [5]. - Amazon is still facing another federal lawsuit from the FTC, which accuses the company of stifling competition in the retail market [5].