Billion-Dollar Backtrack: Amazon Settles HUGE Prime Scam Lawsuit, 35 Million Customers to Get Refunds
the staff of the Ridgewood blog
Ridgewood NJ, In a sudden conclusion to a high-profile legal battle, Amazon has agreed to a historic $2.5 billion settlement with the Federal Trade Commission (FTC). The massive fine addresses allegations that the e-commerce giant used deceptive tactics to trick customers into signing up for its Prime membership program and then actively made it difficult to cancel.
The surprise settlement was announced Thursday, just three days into the federal trial in Seattle, allowing Amazon to avoid a jury verdict that could have resulted in even greater financial damages.
The Breakdown: $2.5 Billion Penalty and Refunds
The settlement, one of the largest in FTC history, is split into two parts:
- $1 Billion Civil Penalty: Paid directly to the FTC.
- $1.5 Billion in Customer Refunds: Allocated to an estimated 35 million customers who were allegedly impacted by “unwanted Prime enrollment or deferred cancellation.”
According to the FTC, eligible customers are expected to receive a refund of approximately $51 within 90 days.
The ‘Dark Patterns’ Allegations
The FTC’s lawsuit, initially filed in June 2023, claimed Amazon systematically misled tens of millions of users. The core allegations centered on so-called “dark patterns”—user interface design choices meant to confuse consumers—used to:
- Deceive customers into signing up for the $139/year Prime subscription.
- “Sabotage” and complicate customers’ attempts to cancel the service once they were enrolled.
Crucially, the suit also placed three senior Amazon executives—including former Prime head Neil Lindsay and Prime boss Jamil Ghani—at risk of being held individually liable, a threat now addressed by the settlement’s terms.
A “Monumental Win” and New Rules
FTC Chairman Andrew Ferguson celebrated the outcome, calling the penalty a “monumental win” for the agency under the current administration, stating the fine is a clear message against companies that “try to cheat ordinary Americans.”
As part of the settlement, Amazon must adhere to strict new regulations on its Prime program:
- The company is prohibited from misrepresenting the terms of a Prime membership.
- It must provide clear and conspicuous disclosures about the terms during enrollment.
- Amazon must obtain consumers’ express consent before charging them for any subscription.
- The company is required to provide an easy, simple way for users to cancel their subscription.
Amazon spokesperson Mark Blafkin stated that the company and its executives “have always followed the law” and that the settlement allows them to “move forward and focus on innovating for customers,” though the FTC noted Amazon admitted no wrongdoing.
The Bigger Picture: Regulatory Headwinds Continue
While the $2.5 billion fine is significant—and is only surpassed by the FTC’s 2019 $5 billion fine against Meta (then Facebook) for privacy violations—it represents a small fraction (roughly 0.1%) of Amazon’s near-$2.4 trillion market cap.
Moreover, this settlement resolves only one of Amazon’s major legal challenges. The company is still gearing up for a far more expansive antitrust trial against the FTC in 2027, where the regulator and 17 state attorneys general allege Amazon used its “monopoly power” to unfairly stifle competition in the e-commerce market.
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I worked many years ago for a blood processing lab.
Same thing…lots of tests that were not requested by the PCP.
The physician told my boss “you write the code, I’ll do the time.”
The whistleblower came away with $48MM.