Amazon has come to a settlement with The United States Federal Trade Commission, agreeing to pay a $1 billion civil penalty and provide $1.5 billion in compensation over allegations that it enrolled consumers in its Prime loyalty program without their consent and made it hard for them to cancel the paid membership.
Amazon and its executives did not admit guilt in this settlement, saying the company had always behaved lawfully.
Mark Blafkin, an Amazon spokesperson, told HomePage News, “Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world. We will continue to do so and look forward to what we’ll deliver for Prime members in the coming years.”
The company has noted that changes demanded by the FTC were made already, some many of them years ago. Amazon resigned itself to the settlement so it can move forward, saving it the cost of litigation as well as allowing it to focus on its customers, according to the company.
The FTC action cited the Amazon and two of its executives, senior vice president Neil Lindsay and vice president Jamil Ghani.
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” FTC chairman Andrew Ferguson declared in a statement from the commission. “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.”
The FTC charged Amazon and its executives violated the FTC Act and the Restore Online Shoppers’ Confidence Act. The FTC alleged Amazon created confusing and deceptive user interfaces that led consumers to enroll in Prime without their knowledge. Compounding these deceptive enrollment practices, the FTC maintained, Amazon also created a complex and difficult process for consumers seeking to cancel their Prime subscription with the goal of preventing consumers from cancelling Prime.
Besides the cash settlement, the FTC insisted the Prime enrollment and cancellation process include a clear and conspicuous button for customers to decline Prime and to disclose all relevant material during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews and cancellation procedures. The settlement also requires Amazon to pay for an independent, third-party supervisor to monitor compliance with a consumer payout distribution process.
