Amazon will pay $2.5 billion to settle claims by the U.S. Federal Trade Commission (FTC) that it used dark patterns to trick millions of users into enrolling in its Prime program and made it as difficult as possible to cancel the recurring subscriptions.
The settlement requires Amazon to pay a $1 billion civil penalty and provide $1.5 billion in refunds to an estimated 35 million consumers affected by the company's deceptive practices related to Prime enrollment.
"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," said FTC Chairman Andrew N. Ferguson on Thursday.
"Today, we are putting billions of dollars back into Americans' pockets, and making sure Amazon never does this again."
Today's announcement follows the FTC's lawsuit against Amazon in June 2023, which alleged that the company had trapped millions into hard-to-cancel Prime memberships by manipulating users into signing up for Prime subscriptions without their knowledge, violating both the FTC Act and the Restore Online Shoppers' Confidence Act.
The FTC said at the time that Amazon used dark patterns throughout its online checkout and subscription cancellation processes, prompting customers to subscribe to Amazon Prime for $14.99 per month while simultaneously making it difficult to locate the option to complete the transaction without enrolling in Prime.
Additionally, it didn't inform the users before enrolling that they were signing up for a automatically renewing Prime subscription.
Amazon also allegedly implemented a cancellation process designed to deter customers from canceling their Prime subscriptions, a process described internally by Amazon as "Iliad," alluding to Homer's epic poem detailing the decade-long Trojan war.
"Amazon documents discovered in the lead up to trial showed that Amazon executives and employees knowingly discussed these unlawful enrollment and cancellation issues, with comments like 'subscription driving is a bit of a shady world' and leading consumers to unwanted subscriptions is 'an unspoken cancer,'" the FTC said today.
In July 2023, Amazon also agreed to pay a $25 million fine to settle allegations of violating children's privacy laws related to its Alexa voice assistant service.