Amazon Settles FTC Prime Case for $2.5 Billion

• Amazon will pay fines and refunds after the FTC alleged deceptive Prime sign-ups and cancellation barriers affecting millions of users.

Amazon has agreed to pay $2.5 billion to resolve allegations brought by the U.S. Federal Trade Commission (FTC) concerning its Prime subscription practices. The settlement includes $1 billion in civil penalties and $1.5 billion allocated for customer reimbursements. According to the FTC, roughly 35 million Prime users may be eligible for compensation, with automatic payouts of $51 for those who signed up under misleading offers and used fewer than three Prime benefits within a year. Amazon did not admit wrongdoing but stated the agreement allows it to move forward and refocus on customer service.

Subscription Practices Under Scrutiny

The FTC’s investigation, which began during President Donald Trump’s administration, focused on how Amazon promoted and managed Prime subscriptions. Evidence presented in court included internal communications where employees described subscription tactics as “shady” and “an unspoken cancer.” Customers who attempted to cancel Prime but were unsuccessful during the specified period can also submit claims for reimbursement. As part of the settlement, Amazon will implement clearer disclosures during sign-up and introduce a prominent button to decline Prime enrollment.

Prime Revenue and User Experience

Prime, launched in 2005 at $79 annually, has become a central revenue stream for Amazon, generating $23.9 billion in the first half of 2025 alone. The subscription fee has steadily increased, reaching $139 in 2022. Promotional offers such as “Get FREE Same-Day Delivery” were cited by the FTC as misleading, as they often led to automatic Prime enrollment without clear notice of recurring charges. Amazon maintains that its systems are designed to be transparent and user-friendly, and it will fund an independent monitor to oversee compliance with the new terms.

Legal Impact and Industry Implications

The FTC announced the settlement just days into a federal trial in Seattle, where it argued that Amazon enrolled users regardless of intent. This case marks the second-largest restitution amount ever secured by the agency and reflects its broader efforts to regulate tech industry practices. Amazon’s share price remained largely unaffected following the announcement, suggesting investor confidence in the company’s long-term strategy. The outcome may influence how other subscription-based platforms design their onboarding and cancellation flows.