SEATTLE (AP) — Amazon has reached a historic $2.5 billion settlement with the Federal Trade Commission, which said the online retail giant tricked customers into signing up for its Prime memberships and made it difficult for them to cancel after doing so.
The Seattle company will pay $1 billion in civil penalties — the largest fine in FTC history, and $1.5 billion will be paid to consumers who were unintentionally enrolled in Prime, or were deterred from canceling their subscriptions, the agency said Thursday. Eligible Prime customers include those who may have signed up for a membership via the company's “Single Page Checkout" between June 23, 2019 to June 23, 2025.
The Federal Trade Commission sued Amazon in U.S. District Court in Seattle two years ago alleging more than a decade of legal violations. That included a violation of the Restore Online Shoppers’ Confidence Act, a 2010 law designed to ensure that people know what they’re being charged for online.
Amazon admitted no wrong-doing in the settlement. It did not immediately respond to requests by The Associated Press for comment Thursday.
Amazon Prime provides subscribers with perks that include faster shipping, video streaming and discounts at Whole Foods for a fee of $139 annually, or $14.99 a month.
It’s a key and growing part of Amazon’s business, with more than 200 million members. In its latest quarterly report, the company in July reported more than $12 billion in net revenue for subscription services, which is a 12% increase from the same period last year. That figure includes annual and monthly fees associated with Prime memberships, as well as other subscription services such as its music and e-books platforms.