Amazon, FTC Agree To $2.5B Settlement In Prime "Dark Patterns" Lawsuit
Amazon has agreed to a surprise $2.5 Billion settlement of FTC lawsuit which alleged the company used "dark patterns" to trick customers into signing up for Prime subscriptions that were purposefully hard to cancel.
While the company does not admit to any wrongdoing as part of their agreement, they will pay a historic $1 billion in civil penalties to the government and another $1.5 billion in redress payments to affected consumers.
Tom Koch (Acting DAD, BE Office of Applied Research and Outreach) and Ted Rosenbaum (Acting BE Director)
The suit, which was originally brought in 2023 under then-FTC Chair Lina Khan, charged Amazon and the named executives with knowingly misleading millions of consumers into enrolling in Prime, violating the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
The FTC alleged Amazon created confusing and deceptive user interfaces to lead consumers to enroll in Prime without their knowledge. Compounding these deceptive enrollment practices, the FTC said Amazon also created a complex and difficult process for consumers seeking to cancel their Prime subscription, with the goal of preventing consumers from cancelling Prime.
Amazon documents discovered in the lead up to trial showed that Amazon executives and employees knowingly discussed these unlawful enrollment and cancellation issues, with comments like “subscription driving is a bit of a shady world” and leading consumers to unwanted subscriptions is “an unspoken cancer.”
However, Amazon denied breaking any laws, arguing its designs and disclosures followed or even surpassed widely used industry standards. The company said its processes were clear to the vast majority of Amazon customers, who chose Prime for benefits such as free two-day shipping.
The historic monetary judgment contained in the settlement is only the third ROSCA case in which the FTC has obtained a civil penalty. It includes:
- a $1 billion civil penalty, which is the largest ever in a case involving an FTC rule violation;
- $1.5 billion in consumer redress, providing full relief for the estimated 35 million consumers impacted by unwanted Prime enrollment or deferred cancellation. This is the second-highest restitution award ever obtained by FTC action.
Additionally, the settlement requires Amazon to stop their unlawful practices and make meaningful changes to the Prime enrollment and cancellation flows by:
- including a clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, “No, I don’t want Free Shipping.”
- Including clear and conspicuous disclosures about all material terms of Prime during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures.
- creating an easy way for consumers to cancel Prime, using the same method that consumers used to sign up. The process cannot be difficult, costly, or time-consuming and must be available using the same method that consumers used to sign up; and
- paying for an independent, third-party supervisor to monitor Amazon’s compliance with the consumer redress distribution process.
The parties reached the deal just days into what was expected to be a month long trial after a judge handed the FTC a partial victory on key points in summary judgment ruling that Amazon broke consumer protection law by revealing Prime’s terms only after collecting customers’ payment information.
Liz Morton
The FTC also took the rare step of naming specific Amazon executives (Neil Lindsay, Russell Grandinetti, and Jamil Ghani) who had the authority to control Prime enrollment and cancellation flows in this lawsuit.
Chun's summary judgment ruling said it would allow at least Ghani and Lindsay to be held personally liable for any violations which were proven at trial, but had left the question of Grandinetti's liability up to a jury.
The FTC's press release says the settlement order is against Amazon and Lindsay and Ghani, but it's not yet clear what portion of the settlement if any will be paid by the executives directly.
“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said FTC Chairman Andrew N. Ferguson.
“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. Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again. The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay.”
Amazon still faces another federal lawsuit, expected to go to trial in early 2027, in which the FTC has accused the company of functioning as a monopoly.
Stay tuned for updates in this developing story.
