Amazon agrees to .5 billion settlement regarding claims of misleading Prime subscription practices.

Amazon has reached a significant .5 billion settlement in response to allegations of deceptive practices related to its Prime subscription service. The announcement was made on Thursday following a federal lawsuit that accused the retail giant of manipulating consumers into not only enrolling in Prime but also making it exceedingly difficult to cancel their subscriptions.

While Amazon did not admit to any wrongdoing as part of the agreement, it has agreed to pay billion in penalties and allocate an additional .5 billion to compensate affected customers. The actions are part of a wider initiative by the Federal Trade Commission (FTC) to address what it describes as “sophisticated subscription traps” that exploit consumers’ behaviors. According to FTC Chairman Andrew Ferguson, the evidence indicated that Amazon’s tactics significantly hindered consumers’ ability to terminate their subscriptions effectively.

In response to the allegations, Amazon has maintained that it has always complied with relevant subscription laws and industry practices. The settlement comes shortly after a trial commenced at the Seattle Federal Court, although Amazon has expressed a desire to move past this legal challenge, signaling a focus on innovation and customer service in future endeavors.

The Prime membership case has marked a rare intersection of legal scrutiny that carried through the administrations of both former President Donald Trump and the current President Joe Biden. The investigation into Amazon’s practices initiated during Trump’s first term in 2021 continued under Biden’s administration until the lawsuit was filed in 2023. Notably, this settlement was finalized under Trump’s second term.

The distribution of the .5 billion compensation will cater to customers who subscribed to Prime between June 23, 2019, and June 23, 2025. Many customers are set to receive automatic payouts of approximately , while others may need to file claims to access their compensation. According to the FTC, over 30 million individuals could potentially be eligible for payments stemming from this agreement.

Allegations included the employment of misleading tactics, such as buttons indicating “No thanks, I don’t want free shipping,” designed to lure consumers into signing up for Prime. Furthermore, the process for cancelling subscriptions was humorously referred to internally by Amazon as “Iliad,” alluding to its perceived complexity and length.

As consumer protection continues to gain traction within regulatory frameworks, this settlement exemplifies the evolving landscape of corporate responsibility and the necessity for transparency in subscription services.

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