Amazon has agreed to pay a historic $2.5 billion to settle a landmark case over its Prime membership program. The U.S. government had alleged the company’s web designs manipulated tens of millions of people into paying for subscriptions that were purposefully hard to cancel.
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Amazon, without admitting wrongdoing, will pay $1 billion in civil penalties to the government and another $1.5 billion in payments to affected consumers, according to court documents. The company, in its statement, said it and its executives “have always followed the law and this settlement allows us to move forward and focus on innovating for customers.”
Millions of people who paid for Amazon Prime between mid-2019 and mid-2025 are expected to automatically receive reimbursements of up to $51, while other Amazon users will be able to submit claims for refunds. Their eligibility will depend on how many Prime perks those shoppers used besides free shipping. Amazon will explain the matter on its website and will make other changes to how Prime subscription options are displayed to shoppers.
The FTC, which regulates competition, brought the lawsuit in 2023 zeroing in on Prime, which last year helped Amazon take in more than $44 billion in subscription revenue. People who pay for Prime are known to shop more frequently and spend more; Amazon last disclosed its Prime subscribers’ count at more than 200 million people in 2021.
The federal lawsuit accused Amazon of illegally using “manipulative, coercive, or deceptive” designs to “trick” shoppers into enrolling in auto-renewing Prime subscriptions, which currently cost $139 a year or $14.99 a month. Regulators also alleged that Amazon purposefully built a convoluted, multi-step cancellation process to discourage people from quitting â and repeatedly backtracked on plans to simplify the process as this led to fewer subscribers.
The case went to trial just this week, in Amazon’s hometown of Seattle. Somewhat unusually for a dense antitrust case, a jury was slated to determine whether Amazon broke the law.
Throughout the court battle, Amazon denied breaking any laws. It argued its sign-up and cancellation processes were simple and clear to the vast majority of Prime users, and that its designs and disclosures followed or even surpassed widely used industry standards.
The settlement deal comes on the heels of testimony by a key FTC witness: former Amazon user experience researcher, Reid Nelson.
Emails and text messages from Nelson revealed that he and his team had repeatedly flagged Amazon’s design tactics as misleading or confusing to customers. In one message, Nelson said Amazon’s business goals would be very difficult to hit if Prime web design was more transparent. During cross examination, Amazon lawyers said the company has spent more than $10 million to solve customer frustration issues like the ones flagged by Nelson and his team.
Amazon still faces another, bigger federal lawsuit, in which the FTC has accused the company of functioning as a monopoly. The tech giant has described it as “wrong on the facts and on the law.” That trial is expected in early 2027, in front of the same judge, John Chun of the U.S. District Court for the Western District of Washington.
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