Amazon reaches $2.5b settlement over Prime enrollment practices

In a landmark settlement, Amazon has agreed to pay $2.5 billion to resolve allegations brought by the Federal Trade Commission (FTC) regarding deceptive practices in enrolling consumers into its Prime subscription service and complicating the cancellation process. The lawsuit, filed in a federal court in Seattle, accused Amazon of intentionally misleading customers during checkout, making it challenging to decline the $139-per-year Prime membership while prominently featuring sign-up options. The FTC highlighted that crucial details about pricing and automatic renewals were often obscured or buried in fine print. Amazon’s internal cancellation system, nicknamed ‘Iliad’—a reference to Homer’s epic about the prolonged Trojan War—was described as deliberately convoluted. As part of the settlement, Amazon is required to overhaul its enrollment and cancellation processes, ensuring transparency and ease of use. Additionally, the company must implement new disclosure requirements before charging consumers. The court had previously ruled that Amazon Prime subscriptions fall under consumer protection laws, emphasizing that Amazon collected billing information without fully disclosing subscription terms. Amazon neither admitted nor denied wrongdoing in the settlement proposal, which was submitted before the third day of testimony in Seattle. This case is part of a broader bipartisan effort to regulate the growing influence of U.S. tech giants, marking a significant shift in government oversight.