On September 25, 2025, Amazon agreed to pay $2.5 billion to settle claims brought by the Federal Trade Commission (FTC) alleging that the company misled consumers into signing up for Prime memberships and made it difficult for them to cancel. The settlement, announced just days into the start of litigation between Amazon and FTC, includes $1 billion in penalties and $1.5 billion in restitution to customers, which the FTC described as one of the largest settlements in the agency’s history.
The FTC’s 2023 lawsuit claimed that Amazon used deceptive user-interface designs, known as “dark patterns,” to trick consumers into enrolling in and automatically renewing Prime subscriptions. Specifically, the FTC alleged the company’s sign-up and cancellation processes were confusing and led to unintentional enrollments. The complaint noted that Amazon Prime is used by an estimated 200 million Americans and generated more than $44 billion in subscription revenue last year.
Under the settlement, Amazon did not admit or deny wrongdoing, stating the settlement allows it to focus on customer innovation. However, Amazon will pay $1 billion in penalties and $1.5 billion in restitution to consumers, with qualifying individuals receiving $51 each. Further, the settlement requires Amazon to cease unlawful practices and implement significant changes to its Prime enrollment and cancellation processes, including providing clear options to decline Prime, disclosing all material terms during enrollment, ensuring an easy cancellation process, and engaging an independent third-party supervisor to monitor compliance.
Why It Matters
Despite the change in federal administration, this settlement signals a continuation of heightened regulatory scrutiny of subscription models. With more states enacting auto-renewal laws, businesses offering subscription services to consumers must provide proper disclosures, notice, and cancellation requirements that comply with both federal and disparate state requirements. The FTC’s enforcement action and uptick in state legislation demonstrate a bipartisan effort to ensure transparency and fairness in digital consumer transactions, serving as a warning that companies must proactively address compliance or face significant legal and financial consequences.