Amazon will pay a record $2.5 billion to settle claims it misled consumers into signing up for Prime and made cancellations difficult, the Federal Trade Commission said Thursday.
The settlement ends a two-year legal battle. Under the agreement, Amazon will pay a $1 billion civil penalty and provide $1.5 billion in refunds to about 35 million customers. The FTC said those users were harmed by “deceptive Prime enrollment practices.”
The agency called the penalty the largest ever in a case involving an FTC rule violation. It is also the second-highest restitution award the agency has secured.
FTC Chairman Andrew Ferguson described the outcome as historic. “Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for them to cancel,” he said.
Amazon denied wrongdoing. “We have always followed the law,” spokesperson Mark Blafkin said in a statement. He added the settlement allows Amazon to “move forward and focus on innovating for customers.”
The FTC said Amazon must now provide clear disclosures about Prime during sign-up and simplify cancellations. It also barred the company from using misleading prompts such as “No, I don’t want Free Shipping.”
Prime costs $14.99 a month or $139 a year. It generates billions in revenue and now offers streaming, grocery delivery, fuel discounts, and exclusive deals.
Amazon does not disclose subscriber numbers. But Consumer Intelligence Research Partners estimates the service had 197 million U.S. members in March 2025.
The $2.5 billion payout represents about 6% of Prime’s 2024 subscription revenue, which totaled $44 billion, according to Emarketer. Analysts say the settlement could streamline the cancellation process but will not dent Prime’s dominance.
Former FTC chair Lina Khan, who filed the case in 2023, criticized the deal. She said the settlement “rescued Amazon from likely being found liable for violating the law” and let it “pay its way out.”
