Amazon agrees $2.5 billion settlement over Amazon Prime sign-ups

Amazon has reached a $2.5 billion (£1.9 billion) settlement with the US Federal Trade Commission (FTC) over allegations it ‘tricked customers’ into signing up for Prime membership and then deliberately made the cancellation process difficult.

The FTC accused the online giant of using deceptive user-interface designs, known as “dark patterns,” to enroll customers automatically during checkout without their clear consent. Furthermore, the agency alleged that the cancellation process was intentionally convoluted—a labyrinthine system internally nicknamed “Iliad,” after the lengthy Greek epic.

The settlement, announced just days after a trial began in Seattle, includes a $1 billion civil penalty—the largest in FTC history for a rule violation—and $1.5 billion to be paid back to an estimated 35 million affected customers.

The FTC asserted that Amazon’s practices violated the Restore Online Shoppers’ Confidence Act (ROSCA), a U.S. law aimed at protecting consumers from misleading online billing.

Amazon admitted no wrongdoing but stated it chose to resolve the matter quickly to focus on innovation. While the settlement is specific to the U.S., it carries significant implications for the UK, where new consumer protection legislation, the Digital Markets, Competition and Consumers (DMCC) Act, is focused on eliminating “subscription traps.”

The DMCC mandates that cancellation must be as simple as signing up, mirroring a key requirement of the U.S. settlement.

The FTC’s action is expected to heighten pressure on UK regulators to rigorously enforce the new law and ensure a fairer experience for all Amazon Prime members, even though UK customers are not directly eligible for a payout from the U.S. fund.