Amazon to pay $2.5 billion to settle Prime enrollment case

SEATTLE

Amazon has agreed 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 alleged that Amazon knowingly tricked consumers into signing up for the $139-per-year Prime service during checkouts.

Amazon will pay $1.5 billion into a consumer fund for refunds and $1 billion in civil penalties.

The case centered 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.

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 cancelation processes.

This includes introducing a clear option for customers to decline Prime membership, and refraining from vague or indirect references like "no thanks, I don't want free shipping."

The company must also implement new disclosure requirements before charging consumers and always disclose the price and auto-renewal feature on the Prime sign-up page.

Amazon said many of these changes have already been made.