Amazon agrees to billion-dollar settlement over Prime subscription traps

The technology and retail giant Amazon has announced it will pay billions in refunds and fines to settle allegations of misleading business practices related to its Prime subscription service, as stated by the government. The company, which is among the most valuable globally, has agreed to pay a civil penalty of $1 billion and $1.5 billion in customer refunds, according to the Federal Trade Commission (FTC). This penalty, according to the government, is the largest ever associated with an FTC violation and concludes a proceeding that has lasted over two years. Amazon did not admit to any wrongdoing as part of the settlement. According to Andrew Ferguson, the chairman of the FTC, Amazon "used sophisticated subscription traps to manipulate consumers into signing up for Prime, and then made it extremely difficult to cancel the subscription." Customers meeting certain criteria are to receive a refund of $51, as indicated in court documents. A settlement amount of $2.5 billion appears relatively small compared to Amazon's market capitalization of over $2 trillion. With potentially high holiday spending approaching, a refund of $51 seems modest. Consumers should see this as a reminder to carefully read terms and conditions when shopping online or elsewhere, as merchants strive to facilitate spending. The FTC stated in its announcement that Amazon created "confusing and misleading" user interfaces that inadvertently led consumers to sign up for Prime and that it was "complex and difficult" to cancel the service. The company has agreed to create a clearly and prominently designed button to decline Prime and to make it easier to cancel the service. An Amazon spokesperson stated that the company is working tirelessly to make signing up for and canceling Prime clear and simple for customers, providing significant value to the many millions of loyal Prime members worldwide. The company will continue working on this. Amazon's Prime service, which offers music and video streaming in addition to shipping benefits, costs about $15 per month or $140 per year. Estimates suggest the service has about 200 million members worldwide.