Amazon, the world’s largest online retailer, has agreed to pay a record-breaking $2.5 billion to settle a lawsuit brought by the Federal Trade Commission (FTC) over allegations that it misled millions of consumers into signing up for its Prime membership and made it unnecessarily difficult for them to cancel. The settlement, announced Thursday, September 25, 2025, marks the largest civil penalty in FTC history for a rule violation and includes $1.5 billion in restitution to an estimated 35 million affected customers.
The FTC’s complaint, originally filed in June 2023 under Chair Lina Khan, accused Amazon of deploying so-called “dark patterns”—deceptive online interfaces that nudged shoppers into Prime subscriptions they often didn’t realize they were purchasing. According to the FTC, Amazon’s checkout process sometimes presented a button to complete a purchase that did not clearly indicate it would also enroll the customer in Prime. And once enrolled, customers faced a labyrinthine process to cancel—internally referred to by Amazon as “Iliad,” a nod to the epic Greek poem about a drawn-out siege. The cancellation process required users to affirm their desire to leave Prime across three different pages, a hurdle that critics say was intentionally designed to deter cancellations.
“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,” FTC Chairman Andrew N. Ferguson said in a statement, as reported by TechCrunch. “Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again.”
The settlement includes a $1 billion civil penalty—the largest ever in an FTC case involving a rule violation—and $1.5 billion in refunds for consumers who were either tricked into enrolling in Prime or were deterred from canceling. As GeekWire noted, this makes the agreement the second-highest consumer restitution award in the agency’s history, trailing only Facebook’s $5 billion privacy settlement in 2019.
Eligible for refunds are Amazon Prime customers who signed up using the company’s “Single Page Checkout” between June 23, 2019, and June 23, 2025. The FTC estimates that roughly 35 million consumers will receive compensation as a result of the settlement.
Amazon Prime, which costs $139 per year or $14.99 per month, offers perks such as faster shipping, video streaming, and discounts at Whole Foods. The service is a key pillar of Amazon’s business model; as of March 2025, an estimated 197 million people were Prime members, according to Consumer Intelligence Research Partners—a 7% increase from the previous year. In its July 2025 financial report, Amazon revealed that subscription services, including Prime, music, and e-books, generated $12.2 billion in net revenue during the most recent quarter, up 12% year-over-year. That figure accounts for about 7% of Amazon’s overall revenue, according to GeekWire.
Despite the settlement’s magnitude, Amazon has not admitted wrongdoing. In a statement, Amazon said, “Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years.” The company also emphasized that it provides clear explanations of Prime’s terms and offers multiple ways to cancel, including by phone, online, and via chat.
The FTC, however, painted a different picture. In its complaint, the agency alleged that Amazon’s “dark patterns” made it nearly impossible for customers to purchase items without also enrolling in Prime. The company’s online interfaces, the FTC said, were deliberately confusing, and attempts to cancel Prime were met with a convoluted, multi-step process that discouraged users from following through. According to The Associated Press, Amazon leadership even slowed or rejected internal proposals that would have made cancellation easier for consumers.
In response to the settlement, the FTC is requiring Amazon to make significant changes to its Prime sign-up and cancellation processes. The company must now include a clear and conspicuous button for customers to decline Prime enrollment—meaning it can no longer use misleading labels like “No, I don’t want free shipping.” Amazon is also required to clearly disclose the subscription cost, billing date and frequency, whether the subscription auto-renews, and the procedure for cancellation at the time of enrollment. Most notably, the cancellation process must be as easy as signing up, using the same method the consumer originally used to enroll. The company will also be subject to independent compliance monitoring going forward, as reported by GeekWire.
The settlement short-circuited a jury trial that had just begun in Seattle this week. Earlier in September, a federal judge in Seattle ruled that Amazon had violated online shopper protection law by collecting payment information before fully disclosing Prime’s terms, a decision that loomed over the company as the trial commenced.
The case is separate from the FTC’s ongoing antitrust suit against Amazon, which accuses the tech giant of illegally stifling competition in the online retail sector. That broader case remains unresolved, but the Prime settlement is already being hailed by consumer advocates as a major win in the fight against deceptive subscription practices. Still, not everyone is satisfied. FTC Chair Lina Khan, who led the lawsuit, called the $2.5 billion penalty “a drop in the bucket” for Amazon and “a big relief for the executives who knowingly harmed their customers.” In her statement, she argued that the settlement rescued Amazon from likely being found liable for violating the law.
Political context has also colored the aftermath of the settlement. Some critics have pointed to Amazon’s high-profile connections in Washington, noting the company’s donations to political campaigns and its founder Jeff Bezos’s ownership of The Washington Post. However, the FTC maintains that its actions are driven by consumer protection and the need to hold even the largest corporations accountable.
For Amazon, the settlement represents both a financial hit and a reputational challenge. Shares of the company dipped slightly following the announcement, though with a market capitalization of nearly $2.4 trillion, the penalty is unlikely to significantly dent Amazon’s bottom line. For consumers, however, the case has set a precedent for how subscription services must operate transparently and fairly—or face the consequences.
With the ink barely dry on the settlement, the eyes of regulators, competitors, and millions of Prime members will be watching closely to see if Amazon lives up to its promises of greater transparency and easier cancellations. For now, the FTC’s action stands as a warning shot to other tech giants: deceptive subscription traps won’t go unchecked forever.
