Amazon.com Inc. will refund $1.5 billion to customers as part of a $2.5 billion settlement with the US Federal Trade Commission (FTC), following allegations that the company misled millions into signing up for its Prime membership and made it unnecessarily difficult to cancel.
The FTC announced that, alongside the refunds, Amazon will also pay $1 billion in civil penalties and commit to simplifying its cancellation process.
The refunds are intended to compensate consumers who, regulators said, were tricked by “dark patterns” that nudged them into Prime subscriptions without clear consent.
Allegations against Amazon
The lawsuit, filed in 2023, accused Amazon and three of its executives of violating a 2010 consumer protection law by tricking users into subscribing to Prime.
The FTC alleged that the company’s cancellation process was intentionally convoluted, making it harder for customers to opt out of the $139-a-year service.
As part of the settlement, two Amazon executives, Neil Lindsay and Jamil Ghani, are barred from engaging in similar conduct going forward. Amazon has not publicly commented on the settlement.
- Prime is a cornerstone of Amazon’s business model, with subscribers typically spending more and shopping more frequently than non-members.
- Membership comes with perks such as free shipping, streaming services, and exclusive discounts.
- About 196 million people in the US lived in households with Prime memberships as of March 2025, up 9% year-on-year, according to Consumer Intelligence Research Partners.
- The figure reflects households, not individual subscriptions, since families often share accounts.
- Amazon reported $12.2 billion in subscription services revenue, mostly from Prime, during the quarter ending June 30, up 11% from a year earlier.
Avoiding a costly trial
The settlement was reached just days after jury selection began in a federal court in Seattle. If the case had gone to trial, Amazon faced the risk of paying billions more in penalties and refunds.
The case is the latest in the growing regulatory scrutiny facing US tech giants. While companies such as Amazon have been seeking closer ties with the White House since President Donald Trump’s return to office, regulatory enforcement remains uneven.
The administration has urged a “light touch” on AI regulation, but companies like Meta Platforms Inc. are still locked in unresolved disputes with the FTC.
What you should know
Amazon Prime and Netflix are the two most popular subscription-based streaming platforms in Nigeria. However, an increase in subscription prices has seen many Nigerians shifting to freemium services like YouTube for video streaming.
Reflecting the waning interest in the region, Amazon Prime last year started cutting its budgets for African and Middle Eastern content as it shifts its international focus toward European originals. The restructuring triggered staff layoffs in Sub-Saharan Africa and the MENA region.
