The Federal Trade Commission has reached a historic settlement with Amazon, Senior VP Neil Lindsay, and VP Jamil Ghani over allegations that the company enrolled millions in Prime without consent and made cancellations difficult. The settlement requires Amazon to pay a $1 billion civil penalty and provide $1.5 billion in refunds to affected consumers. In addition, Amazon must stop its unlawful enrollment and cancellation practices and implement clear disclosures during the Prime sign-up process.
“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.
The FTC alleged that Amazon knowingly misled consumers through deceptive user interfaces and complex cancellation procedures, in violation of the FTC Act and the Restore Online Shoppers’ Confidence Act. Documents revealed internal discussions referring to subscription manipulation as “a bit of a shady world” and “an unspoken cancer.” The settlement, approved unanimously by the FTC, provides full relief for an estimated 35 million affected consumers and represents the largest civil penalty in FTC history for a rule violation. The proposed order has been filed in the U.S. District Court for the Western District of Washington.
