Amazon to Pay $2.5 Billion to Settle Prime Subscription Allegations

Amazon has agreed to pay $2.5 billion to resolve claims from the Federal Trade Commission (FTC) that it misled customers into signing up for its Prime membership program. The settlement, announced by the FTC, includes $1 billion in fines and $1.5 billion in reimbursements to affected subscribers. 

The agreement stems from allegations that Amazon made it confusing for consumers to understand when they were enrolling in Prime and difficult to cancel once subscribed. Roughly 35 million customers are eligible for payouts, with most expected to automatically receive $51 if they signed up between June 23, 2019, and June 23, 2025, under certain offers and rarely used Prime benefits. Customers who attempted but failed to cancel during that period may also file claims. As part of the deal, Amazon did not admit to any wrongdoing. 

For Amazon, the financial hit is minor compared to its scale—the company generates a similar amount in sales revenue every 33 hours. Shares of the e-commerce giant barely moved after the announcement, signaling that investors view the outcome as manageable. 

What Changes for Consumers 

Under the settlement, Amazon will introduce a “clear and conspicuous” button for declining Prime enrollment and simplify the cancellation process. The company also committed to disclosing subscription terms more transparently and funding an independent compliance monitor. Amazon emphasized that many of these changes were already in place before the settlement was reached. 

The settlement was announced just days into a federal trial in Seattle. The FTC had accused Amazon executives of resisting reforms between 2017 and 2022, despite internal concerns. Investigators cited internal discussions where employees acknowledged that “subscription driving is a bit of a shady world” and that leading consumers to unwanted subscriptions was “an unspoken cancer.” Amazon began adjusting its processes in 2022 while under federal scrutiny, but the FTC filed suit the following year. 

The $2.5 billion resolution marks the second-largest restitution in FTC history. FTC Chair Andrew Ferguson described the deal as “a monumental win for millions of Americans tired of subscriptions that feel impossible to cancel.” However, former FTC Chair Lina Khan, who filed the case, offered a more critical view, calling the settlement "a drop in the bucket for Amazon" on social media. 

Impact on Amazon’s Prime Business 

Despite the penalty, the settlement is unlikely to dent Prime’s dominance. The subscription service, launched in 2005, now costs $139 annually and generated $23.9 billion in revenue in the first half of 2025 alone. The FTC argued that Amazon drove recruitment with pitches like "Get FREE Same-Day Delivery," which enrolled users into Prime without clearly disclosing that it would lead to recurring charges. 

Industry analysts say the settlement won’t significantly change Prime’s trajectory. “Amazon may have made Prime easier to cancel, but the program remains deeply entrenched in most American households,” noted eMarketer’s Zak Stambor. 

Summary:

Amazon’s $2.5 billion settlement with the FTC reflects growing regulatory scrutiny over subscription models. While it delivers a tangible win for millions of Prime members, the financial and operational impact on Amazon appears limited. Prime continues to be one of the company’s most profitable growth engines, with little sign of slowing down.

FAQs on Amazon’s $2.5 Billion Prime Settlement

1. Why is Amazon paying $2.5 billion?

Amazon agreed to the settlement after the FTC accused the company of misleading customers into enrolling in Prime and making it difficult to cancel. The $2.5 billion includes $1 billion in fines and $1.5 billion in reimbursements to customers.

2. Who is eligible for reimbursement?

About 35 million Prime subscribers are eligible. Customers who signed up for Prime between June 23, 2019, and June 23, 2025, through certain offers and rarely used Prime benefits will automatically receive $51. Those who tried but failed to cancel during that period can also file claims.

3. Do affected customers need to apply for compensation?

Most eligible customers will receive automatic payouts. However, individuals who attempted to cancel but couldn’t may need to file a claim to receive reimbursement.

4. Did Amazon admit wrongdoing in the settlement?

No. Amazon did not admit to any wrongdoing but agreed to make changes to its subscription sign-up and cancellation processes.

5. What changes will Amazon make to Prime sign-ups and cancellations?

The company will add a clear option to decline Prime enrollment, simplify the cancellation process, provide more transparent disclosures during sign-up, and fund an independent compliance monitor.

6. How significant is this penalty for Amazon financially?

For Amazon, the impact is limited. The company generates roughly $2.5 billion in sales every 33 hours, meaning the settlement won’t materially affect its financial standing.

7. How does this compare to other FTC settlements?

This is the second-largest restitution amount ever secured by the FTC, signaling the agency’s tougher stance on subscription practices.

8. Will this affect Amazon Prime’s growth or popularity?

Analysts say the settlement is unlikely to dent Prime’s dominance. The service remains deeply embedded in U.S. households and continues to be one of Amazon’s biggest revenue drivers.

9. What does this mean for the broader subscription industry?

The case highlights regulators’ growing scrutiny of subscription-based business models, especially practices that make cancellation difficult. It may push other companies to adopt clearer and more transparent enrollment processes.