The Federal Trade Commission has secured a settlement with Amazon.com, Inc., as well as Senior Vice President Neil Lindsay and Vice President Jamil Ghani, settling allegations that Amazon enrolled millions of consumers in Prime subscriptions without their consent, and knowingly made it difficult for consumers to cancel. Amazon will be required to pay a $1 billion civil penalty, provide $1.5 billion in refunds back to consumers harmed by their deceptive Prime enrollment practices, and cease unlawful enrollment and cancellation practices for Prime.
FTC Chairman Andrew N. Ferguson said, “The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription.”
In addition to the monetary payments, the settlement requires Amazon to:
- include a clear and conspicuous button for customers to decline Prime. Amazon can no longer have a button that says, “No, I don’t want Free Shipping.”
- Include clear and conspicuous disclosures about all material terms of Prime during the Prime enrollment process, such as the cost, the date and frequency of charges to consumers, whether the subscription auto-renews, and cancellation procedures.
- create an easy way for consumers to cancel Prime, using the same method that consumers used to sign up. The process cannot be difficult, costly, or time-consuming and must be available using the same method that consumers used to sign up; and
- pay for an independent, third-party supervisor to monitor Amazon’s compliance with the consumer redress distribution process.
FTC filed the proposed order in the U.S. District Court for the Western District of Washington, where it must be approved by a judge in order to have the force of law.
