WASHINGTON: Amazon agreed Thursday to pay $2.5 billion to settle allegations from a U.S. regulator that it used deceptive practices to enroll consumers in Amazon Prime and made it difficult to cancel subscriptions.
The Federal Trade Commission’s lawsuit, filed in federal court in Seattle, alleged that Amazon knowingly tricked consumers into signing up for the $139-per-year Prime service during checkouts.
The settlement represents one of the FTC’s largest financial recoveries in a consumer protection case.
The case centers on two main allegations: that Amazon enrolled customers without clear consent through confusing checkout processes, and that it created a deliberately complex cancellation system internally nicknamed “Iliad” – after Homer’s epic about the long, arduous Trojan War.
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The FTC alleged that Amazon’s checkout process forced customers to navigate confusing interfaces where declining Prime membership required finding small, inconspicuous links – while signing up for the service used prominent buttons.
Crucial information about Prime’s price and automatic renewal was often hidden or disclosed in fine print, the FTC also alleged.
Under the settlement, Amazon must reform its Prime enrollment and cancellation processes, including providing clear decline options and simplifying cancellation procedures.
The company must also implement new disclosure requirements before charging consumers.
The court already ruled last week that Amazon Prime subscriptions are subject to consumer protection laws and that Amazon obtained consumers’ billing information before fully disclosing subscription terms.
In the settlement proposal, made before a third day of testimony was to begin in the Seattle court, the company neither admits nor denies wrongdoing. Amazon did not immediately respond to a request for more information.
The case is part of a volley of lawsuits launched in recent years in a bipartisan effort to rein in the power of U.S. tech giants after years of government complacency.
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