Amazon is in legal trouble. The company agreed to pay $2.5 billion because, according to the US Federal Trade Commission (FTC), it tricked its customers into becoming Prime members and made it hard to cancel them. So goes against consumer rights, and so they had to settle for paying back the customers and a fine to the government. This settlement is now called historic because it’s the largest civil penalty for an FTC rule violation ever. The news made headlines on September 25, and many were left wondering with questions. So, who is getting the refund? How will the money be split? For that, learn more.
How Is the $2.5 Billion Split?
- $1 billion → Will go to the US government as a fine for violating the law.
- $1.5 billion → Will go as a refund to its customers who unintentionally signed up and had trouble cancelling their Prime subscription.
Why Amazon Settled?
- When the trial started in Seattle, the FTC’s side of the case looked clearly stronger.
- Amazon, on the other hand, after realising that it’s not easy to stretch the fight, decided to settle for the pay. So, there were no long trials.
- However, Amazon didn’t admit that it did anything wrong (but still has to pay the fine).
- It only said it wants to go for a settlement to avoid years of legal battles.
Refunds for Customers
- Amazon is in preparation to set up a claims process for its 30 million+ customers (who may have been affected by the cancellation issues).
- It will refund to anyone who has accidentally taken the membership via Single Page Checkout between June 23, 2019, and June 23, 2025.
- They may get up to $51 within 90 days.
What the FTC Said?
- According to the FTC, Amazon has clearly made it hard to buy items without signing up for Prime.
- The buttons on the platform didn’t clearly say that the user is signing up for Prime.
- It made the cancellation difficult, as it required confirming cancellation on three separate pages.
Legal Battle Timeline:
- The matter came to the attention of the FTC in 2021, and it had a keen eye on Amazon’s practices.
- It filed a lawsuit in 2023 under FTC Chair Lina Khan, an antitrust expert.
- And according to the FTC’s Restore Online Shoppers’ Confidence Act (2010), a user should be clearly educated on the charges before paying.
Settlement Rules for Amazon Going Forward:
- Amazon should no longer trick its customers.
- It should clearly show costs and get the customer’s consent.
- Must have an easy-to-use cancellation process in place.
- Renewals on automate should be clearly marked.
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Vivek Dev Jacob
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