The Federal Trade Commission Imposes a Historic Settlement of $2.5 Billion on "Amazon"
The Federal Trade Commission (FTC) announced on Thursday a landmark settlement agreement with e-commerce giant "Amazon", which will be required to pay approximately $2.5 billion to settle allegations of using deceptive marketing practices for its "Prime" subscription service.
This settlement is a significant victory for consumers and the regulatory agency, as nearly 35 million subscribers are set to receive compensation. The compensation will be automatically distributed from a fund worth $1.5 billion to customers who signed up for "Prime" between June 2019 and June 2025 through specific offers but used the service's benefits minimally, with each receiving $51 according to court documents. Claims will also be allowed for customers who attempted to cancel their subscriptions unsuccessfully during that period.
As a key part of the settlement, "Amazon" has committed to making substantial improvements to the transparency of the subscription process, agreeing to add a "clear and obvious" button that allows customers to easily opt-out of the subscription, along with completely simplifying the cancellation procedures. The company will also be required to explicitly disclose the terms of the subscription during sign-up, and an independent monitor will be appointed to oversee its compliance with these terms, with "Amazon" bearing the costs of this oversight.
In response to the decision, "Amazon" issued a statement expressing its satisfaction with the settlement, stating: "We are working incredibly hard to make it clear and simple for customers to both sign up for and cancel their Prime membership, and to provide great value to our millions of loyal members around the world." The company noted that the settlement allows it to "move forward and focus on customers," considering that the imposed commitments largely align with the changes it has already implemented.
It is worth noting that this case stems from allegations made by the Federal Trade Commission against "Amazon" officials for their refusal to implement improvements to the "Prime" procedures between 2017 and 2022, leading the company to begin implementing them later in 2022 in conjunction with the investigation it was undergoing, which resulted in the lawsuit being filed the following year.
Commission officials indicate that this settlement represents the second-largest compensation in the history of the agency's lawsuits, marking a significant victory for its strict policies towards the technology sector. Despite the large amount, the settlement seems modest for "Amazon", which generates revenues equivalent to $2.5 billion every 33 hours, highlighting the challenge regulators face in holding tech giants accountable.
