The Case and Allegations
The FTC first brought its complaint in June 2023, describing Amazon’s approach as deliberate and systematic. Regulators argued that the company used design tactics that steered people into Prime memberships without clear consent. Prime costs $14.99 per month in the United States, and the subscription renews automatically unless cancelled.
The investigation found that cancellation was especially burdensome. Customers had to navigate through what regulators described as a four-page, six-click, fifteen-option process before reaching the final cancellation screen. This was compared in the complaint to an epic journey, with investigators nicknaming the system “the Iliad Flow” after Homer’s ancient poem.
Documents released during the case showed that Amazon executives and managers were aware of the problems. Employees themselves described subscription driving as “a shady world.” Some even referred to Chief Executive Andy Jassy as the “chief dark arts officer,” according to filings.
The FTC estimated that around 35 million people were affected by these practices. A report published in 2023 revealed that when Amazon implemented its so-called Project Iliad in 2017, cancellations of Prime subscriptions dropped by 14 percent. This reduction helped the company avoid significant losses in recurring revenue.
The Settlement
Amazon will pay $1 billion in civil penalties and $1.5 billion in direct consumer relief. According to court filings, payments will be distributed automatically to some users, while others will need to submit claims. The refunds could reach up to $51 per person in some cases.
Under the agreement, Amazon did not admit to wrongdoing. It will, however, make several changes to its systems. The company must add a clear button for declining Prime membership, remove misleading prompts that implied consumers were rejecting free shipping, and provide clear disclosures of costs, renewal terms, and cancellation policies. It must also make cancellation as simple as enrollment.
To ensure compliance, the settlement requires an independent third-party supervisor. This monitor will oversee changes to the interface and manage the disbursement of refunds to affected consumers.
Wider Impact on Subscription Models
The case has revived debate about the subscription economy. Nearly three-quarters of companies that sell directly to consumers now rely on recurring memberships. Complaints about the difficulty of cancelling services have grown, covering everything from streaming platforms to gyms and meal kits.
Consumer advocates point to the Amazon case as proof that regulations are needed to protect people from what they describe as subscription traps. They argue that many businesses deliberately design obstacles to cancellation.
The FTC has attempted to introduce a “click-to-cancel” rule that would make cancellation as straightforward as sign-up. That rule was meant to take effect in July 2025 but was blocked in court after lobbying from industry groups. Companies argued that offering multiple steps could give customers more choices or allow them to find better deals.
Reactions to the Settlement
Reactions to the Amazon decision have been mixed. The American Economic Liberties Project, a nonprofit group that campaigns against corporate concentration, criticized the outcome. Its leaders said the settlement lets Amazon and its executives avoid accountability. They urged the FTC to revive the abandoned “click-to-cancel” rule.
Some former regulators also questioned the timing. Alvaro Bedoya, a senior advisor to the group and a former FTC commissioner, suggested that the White House may have pressured the agency to settle, though the administration rejected that claim. Officials insisted that the deal was independent and highlighted that it was the second-largest consumer redress action in U.S. history.
Trade groups representing technology companies supported the decision. NetChoice, which advocates for internet firms, said the settlement showed cooperation between government and business instead of protracted courtroom battles.
Consumer watchdogs welcomed the result as well. The Public Interest Research Group called it a positive step that could influence how all subscription services operate, not just Amazon. They argued that it may deter companies from confusing customers in the future.
Guidance for Consumers
The case has also renewed attention on how individuals can manage subscriptions. Consumer groups advise checking trial offers carefully, using credit cards instead of debit cards for recurring payments, and keeping records of sign-ups and cancellation attempts. They also suggest setting calendar reminders before renewals and removing payment details from accounts when possible.
Consumers who struggle to cancel subscriptions are encouraged to report their cases to the FTC or to their state attorneys general.
A Landmark for the FTC
At $2.5 billion, the Amazon settlement ranks among the largest consumer protection cases in American history. Regulators say the decision is meant both to return money to consumers and to force lasting change in how the company handles Prime memberships.
For Amazon, the payout ends a drawn-out dispute, though the company continues to insist that it already meets high standards for transparency and customer choice. For regulators and consumer advocates, the case stands as a warning to any company that builds obstacles into the path of customers trying to leave.
Notes: This post was edited/created using GenAI tools.
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