Amazon Hit With $2.5B FTC Smackdown Over Alleged Sneaky Prime Membership Tricks

The company was accused of deceiving its customers into enrolling for Prime subscriptions and making cancellations deliberately difficult.

Amazon has agreed to a record $2.5 billion settlement with the U.S. Federal Trade Commission (FTC) for an alleged membership scam.

The company was accused of deceiving its customers into enrolling for Prime subscriptions and making cancellations deliberately difficult, according to federal filings. The deal is one of the largest civil penalties ever imposed by the agency.

Under the agreement, Amazon will pay $1.5 billion in refunds to affected customers and $1 billion as a civil penalty. Customers will need to meet two criteria to be eligible. Those who enrolled in Prime between June 23, 2019, and June 23, 2025, via the platform’s misleading interfaces and used fewer than three benefits, will receive $51 automatically. Others with more engagement may submit claims, but are not guaranteed compensation.

The FTC alleged that Amazon employed “dark patterns” and manipulative website designs to encourage users to enroll in Prime without their express consent. Additionally, the company crafted convoluted cancellation flows to discourage exits. Internal documents and testimony during the trial reportedly showed Amazon employees discussed making subscription cancellations “hard” to reduce turnover.

In a statement, FTC Chair Andrew Ferguson spoke about the company’s alleged deception.

“The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime and then made it exceedingly hard for consumers to end their subscription. Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again. The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay,” Ferguson wrote.

Amazon denied any admission of wrongdoing, saying the settlement allows it to “move forward and focus on innovating for customers.”

The company is committed to clearer disclosures and simplified cancellation options. Amazon now implements transparent opt-out buttons for Prime offers in its user interface.

Some critics argue that the penalty is not severe enough, given the billion-dollar corporation’s large relative size and reach. Nevertheless, the settlement sends a strong signal about regulators’ increasing scrutiny of Big Tech and their use of subscription models. Amazon also faces ongoing antitrust challenges, with another FTC case scheduled for trial in 2027 that accuses the company of monopolistic practices.