Amazon to Pay $2.5 Billion in Prime Membership Settlement

Technology|Amazon to Pay $2.5 Billion to Settle Claims It Tricked Prime Customers

Amazon agreed to pay $2.5 billion to settle claims that it tricked tens of millions of people into signing up for its Prime membership program, and then made it hard for customers to cancel when they wanted out.

The settlement announced on Thursday came days into a jury trial that began in Seattle this week over the issue, which stemmed from a lawsuit filed by theFederal Trade Commission in 2023. The lawsuit cut to the heart of how Amazon defines itself as a champion for the hundreds of millions of consumers who regularly use its online shopping service.

The settlement includes $1 billion in penalties and $1.5 billion in payouts to customers, who could get $51 each if they qualify. The agency said it is one of the largest settlements in its history.

Amazon did not admit or deny wrongdoing in agreeing to settle. The company did not immediately respond to a request to comment.

An estimated 200 million people in the United States use Prime to shop on Amazon. Subscriptions, primarily Prime, brought in more than $44 billion last year, but Prime’s value to Amazon goes far beyond the monthly fees. Prime members are the company’s best customers: they buy more things, and buy more frequently, than people who are not signed up for the service.

The F.T.C. chairman, Andrew Ferguson, has been a vocal critic of the biggest tech companies, which he has accused of stifling speech and using their power to crush competition. The agency has filed antitrust lawsuits against Amazon and Meta, and has launched investigations into artificial intelligence companies over concerns about children using chatbots, as well as tech giants’ investments in A.I. start-ups.

“This is consistent with Chairman Ferguson’s agenda for the agency, where he is focused on the US consumer first and foremost and making them whole,” an F.T.C. official said on a call with reporters.

Under the agreement, Amazon will within 90 days give $51 to customers who went through the sign-up process that the F.T.C. had questioned. To qualify, customers must fit certain criteria, such as barely using Prime benefits like video streaming after they enrolled.

Amazon will also notify other customers that they can submit a claim if they believe that they unintentionally enrolled in the program or wanted to cancel but were induced not to by offers during the cancellation process.