Amazon will pay a record $2.5 billion settlement over its practices regarding Amazon Prime subscriptions, the U.S. Federal Trade Commission (FTC) announced today.
The FTC reached an agreement with the technology giant “Amazon” regarding the distribution of its Prime service, according to reports from Insider.
Under the terms of the settlement, Amazon will pay $1 billion in penalties and $1.5 billion in refunds to customers who were improperly signed up for Prime or faced obstacles when attempting to cancel their memberships.
The FTC alleges that Amazon employed “subscription traps,” utilizing confusing website and app interfaces to enroll consumers in Prime,and then deliberately making the cancellation process unnecessarily complex,costly,and time-consuming.
Court documents submitted by Amazon revealed that company employees were aware of these issues and recognized them as systemic problems.
The FTC stated that the $1 billion penalty represents the largest civil penalty it has ever secured for violations of its rules, while the $1.5 billion in customer refunds is the second-largest in the agency’s history.The payments will be distributed to approximately 35 million Amazon customers in the United States.
