Amazon.com Inc. has agreed to pay $2.5 billion and revamp its Prime membership program after federal regulators accused the company of using deceptive tactics to lock millions of consumers into subscriptions and make it intentionally difficult to cancel.
The Federal Trade Commission announced the settlement Thursday, calling it one of the largest consumer protection cases 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 — and distribute $1.5 billion in refunds to an estimated 35 million customers who were charged for unwanted Prime subscriptions or faced barriers when trying to cancel.
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 leave.
The agency alleged Amazon violated both the FTC Act and the Restore Online Shoppers’ Confidence Act by deploying so-called “dark patterns” — manipulative user-interface designs — that obscured costs, auto-renewal terms, and cancellation procedures. Internal records cited by the FTC revealed executives knew the practices were problematic, with one employee referring to unwanted enrollments as “an unspoken cancer.”
The settlement also imposes sweeping changes. Amazon must disclose all material terms before enrollment, provide a clear option to decline Prime, and make cancellation as simple as sign-up. An independent third-party monitor will oversee compliance and refund distribution. The unanimous 3-0 Commission vote sends the order to federal court in Washington state for approval.
While the case centers on one of the world’s largest retailers, the ruling carries lessons for any company using subscription or auto-renewal models — including wholesale distributors. Many distributors have expanded into subscription-based replenishment, loyalty memberships, and bundled service programs.
Regulators’ focus on transparency and fairness signals that such models must be designed with clarity and customer trust at the forefront. Industry analysts say distributors relying on recurring revenue through managed inventory programs or membership-based services will need to review enrollment and cancellation processes to avoid being seen as coercive.
“Amazon’s settlement sets a precedent for how regulators view subscription commerce,” said one Washington-based trade compliance expert. “Distributors experimenting with loyalty programs or automated reorder systems should assume the same standards will apply to them.”
The outcome underscores that customer experience design is now a compliance issue, not just a marketing tactic. Distributors could face legal and reputational risks if their programs rely on confusing sign-ups or convoluted exits.
Prime, which costs $139 a year in the United States and has more than 200 million members globally, remains central to Amazon’s retail strategy. But with the FTC framing its practices as unlawful, the agency has made clear that subscription revenue cannot come at the expense of consumer choice.
Amazon has yet to respond to requests for comment.
