Amazon has reached a landmark settlement with the Federal Trade Commission (FTC) over allegations of deceptive practices related to Prime membership enrollment. The deal, totaling $2.5 billion, includes a $1 billion civil penalty – the largest ever imposed by the FTC in a rule violation case – and $1.5 billion in refunds for approximately 35 million consumers impacted by confusing Prime sign-up and cancellation procedures.
The FTC’s investigation revealed that Amazon employed ‘dark patterns’ – intentionally misleading user interfaces – to steer shoppers towards Prime memberships without clear consent. Consumers were also allegedly met with a convoluted and difficult cancellation process. As part of the settlement, Amazon is required to fundamentally redesign its Prime sign-up interface, ensuring transparent disclosures and a prominent, easily accessible ‘Decline’ button. This addresses concerns about consumers being manipulated into subscriptions they did not intend to purchase.
The settlement underscores the importance of clear consumer protections within subscription services. Amazon Prime memberships offer benefits like discounted shipping and access to streaming services, generating $12.2 billion in revenue for the company in the most recent quarter, representing roughly 7% of Amazon’s overall revenue.