FTC Amazon Prime Lawsuit Settlement
FTC Amazon Prime Lawsuit Settlement Erik Mclean/Pexels

The United States Federal Trade Commission (FTC) has announced a record $2.5 billion settlement with Amazon over allegations of misleading practices involving its Prime membership.

The deal, confirmed on 25 September 2025, resolves a lawsuit that claimed Amazon tricked customers into enrolling in Prime and made it difficult to cancel. The settlement, which includes civil penalties and refunds, is described by regulators as the largest of its kind under subscription law.

Settlement Amount and Breakdown

In an official press release, the FTC stated that Amazon will pay a total of $2.5 billion (£1.87 billion) under the settlement. This figure is divided into two parts: $1 billion in civil penalties and $1.5 billion in consumer redress for affected Prime members.

Officials highlighted that the penalty represents the largest ever secured under the Restore Online Shoppers' Confidence Act (ROSCA), a statute that regulates online subscriptions. The consumer refund portion will be distributed to millions of eligible Amazon customers in the United States.

Amazon has not admitted wrongdoing as part of the agreement. By settling, the company avoids a lengthy court battle while agreeing to overhaul its Prime subscription processes.

Why the FTC Sued Amazon

Alleged Deceptive Practices

The lawsuit centred on claims that Amazon used deceptive designs to push customers into subscribing to Prime. According to the FTC, Amazon embedded opt-in prompts within checkout and enrolment pages that caused many users to sign up without clearly consenting.

The regulator also alleged that cancelling Prime was intentionally made difficult. Internally, Amazon reportedly called its cancellation process 'Iliad', a reference to Homer's long and drawn-out epic. Customers were required to navigate multiple screens, decline special offers and confirm their decision several times before successfully cancelling.

Legal Basis

The FTC accused Amazon of violating Section 5 of the FTC Act, which prohibits unfair or deceptive practices, and ROSCA, which requires clear consent and simple cancellation for subscription services.

The investigation began in 2021 and resulted in a formal complaint filed in 2023. The trial opened in September 2025 in Seattle, but a settlement was reached just days into proceedings.

Refunds for Amazon Prime Customers

Eligibility

The settlement covers US customers who subscribed to Amazon Prime between 23 June 2019 and 23 June 2025. Individuals who were unknowingly enrolled or who faced barriers when attempting to cancel are included.

Refund Process

Refunds will be handled in two stages. Customers who used three or fewer Prime benefits in a 12-month period will automatically receive payments of up to $51. For others, a claims process will be introduced, requiring submission of forms after the automatic payouts are complete.

Amazon is required to notify eligible customers within 30 days via email, website notices and post. Automatic payments will be distributed within 90 days, while the claims process will remain open for 180 days. An independent monitor will oversee the distribution of funds.

Changes Amazon Must Implement

Under the settlement, Amazon must redesign its Prime enrolment and cancellation flows. New requirements include:

  • A clear and conspicuous 'decline Prime' button at sign-up
  • Disclosure of all key subscription terms, including cost, renewal frequency and cancellation options
  • A cancellation process that is no harder than enrolment and accessible through the same method

The FTC has prohibited Amazon from repeating the disputed practices in the future.

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