Amazon Ordered to Pay $2.5B Over Misleading Prime Subscriptions

Amazon has agreed to pay a massive $2.5 billion US ($3.48 billion CAD) after U.S. regulators accused the company of tricking people into signing up for Prime and then making it a nightmare to cancel.

The Federal Trade Commission (FTC) says Amazon misled millions of customers with confusing sign-up screens and “dark patterns” that pushed people toward Prime without their consent. Once enrolled, canceling Prime was made deliberately complicated, involving multiple screens and unclear options designed to frustrate users.

The settlement includes a $1 billion US fine, the largest ever tied to an FTC rule violation, along with $1.5 billion US in refunds to around 35 million customers. Internal Amazon documents revealed during the case showed that employees themselves knew the tactics were shady, with one calling subscription driving “an unspoken cancer.”

On top of the financial penalties, Amazon is required to overhaul how Prime works. The company must now make the costs and renewal terms obvious during sign-up, stop using misleading buttons like “No, I don’t want free shipping,” and ensure that canceling Prime is just as straightforward as joining. An independent monitor will oversee the refund process and make sure Amazon actually sticks to these changes.

Amazon told CNBC in a statement that its executives and the company “have always followed the law and this settlement allows us to move forward and focus on innovating for customers.”

The FTC’s unanimous ruling is being described as one of the agency’s biggest consumer protection wins to date.

The Competition Bureau here is investigating Amazon’s marketing and seller pricing policies, but these probes do not target Prime subscriptions. It’s unclear if these FTC developments could influence future scrutiny by the Competition Bureau, so stay tuned (we tend to usually follow the U.S. when it comes to these things).