Amazon.com Inc. has agreed to pay $2.5 billion and overhaul its popular Prime membership program after federal regulators accused the company of using deceptive tactics to lock millions of consumers into subscriptions and then making it intentionally difficult to cancel.

The Federal Trade Commission (FTC) announced the deal Sept. 25, calling it one of the largest consumer protection settlements in its history. The order requires Amazon to pay a $1 billion civil penalty — the largest ever tied to a violation of an FTC rule — along with $1.5 billion in refunds to an estimated 35 million customers who were charged for unwanted Prime subscriptions or faced obstacles when trying to leave the service.

FTC chair Andrew Ferguson described the outcome as “a monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel.” He said Amazon’s enrollment and cancellation flows were designed as “subscription traps,” steering consumers into sign-ups without consent and frustrating efforts to exit.

Amazon did not immediately respond to Digital Commerce 360’s requests for comment.

Amazon ranks No. 1 in Digital Commerce 360’s Top 2000 Database. The database is how Digital Commerce 360 tracks the largest North American online retailers by their annual ecommerce sales.

Amazon is also No. 3 in Digital Commerce 360’s Global Online Marketplaces Database. That database ranks the 100 largest such marketplaces by third-party gross merchandise value (GMV).

FTC settlement: Amazon used ‘deceptive subscriptions’

The FTC charged that Amazon violated both the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA) by deploying so-called dark patterns — manipulative user-interface designs — that misled consumers about the terms of Prime.

Regulators said Amazon buried key details about costs, auto-renewal, and billing frequency during enrollment. At the same time, it labeled opt-out options in misleading ways, such as buttons reading, “No, I don’t want Free Shipping.” Cancellation was equally convoluted. The FTC said Amazon forced users through a multi-step “Iliad” process that was confusing, time-consuming, and designed to suppress cancellations.

Internal company records cited in the case revealed that executives were aware of the practices. Employees described subscription-driving tactics as “a bit of a shady world,” and one internal comment referred to unwanted enrollments as “an unspoken cancer.”

Beyond financial penalties, the order mandates sweeping changes.

FTC’s changes to Amazon subscriptions

• Consumers must see a clear, conspicuous option to decline Prime during sign-up.
• Amazon must disclose all material terms — including cost, auto-renewal, and cancellation procedures — before enrollment.
• Prime cancellation must be as simple as sign-up, available through the same method and free from unnecessary hurdles.
• An independent third-party monitor will oversee Amazon’s compliance and ensure proper distribution of refunds.

The unanimous 3-0 vote by the commission sends the order to the U.S. District Court for the Western District of Washington for approval. Once signed by a judge, the FTC’s settlement about Amazon subscriptions will carry the force of law.

The FTC said the case marks only the third time it has secured civil penalties under ROSCA, and the second-largest consumer restitution award in agency history.

The outcome underscores growing regulatory scrutiny of subscription-based business models, particularly in technology and ecommerce. Prime, which costs $139 a year in the United States, has more than 200 million members worldwide and is a cornerstone of Amazon’s retail strategy.

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Sign up for a complimentary subscription to Digital Commerce 360 B2B News. It covers technology and business trends in the growing B2B ecommerce industry. Contact Mark Brohan, senior vice president of B2B and Market Research, at mark@digitalcommerce360.com. Follow him on Twitter @markbrohan. Follow us on LinkedIn, X (formerly Twitter), Facebook and YouTube.