SEATTLE — Amazon has agreed to a $2.5 billion settlement with the Federal Trade Commission (FTC) over allegations that it misled customers into signing up for its Prime membership and made cancellation difficult. The settlement, announced on Thursday, includes $1 billion in civil penalties, marking the largest fine in FTC history. Additionally, $1.5 billion will be allocated to reimburse consumers who were unintentionally enrolled in Prime or faced obstacles when trying to cancel their subscriptions.

The FTC's investigation revealed that Amazon's practices affected an estimated 35 million consumers. Those eligible for compensation include individuals who signed up for Prime through the company’s “Single Page Checkout” between June 23, 2019, and June 23, 2025. The FTC filed the lawsuit against Amazon in U.S. District Court in Seattle two years ago, citing violations of the Restore Online Shoppers’ Confidence Act, a law aimed at ensuring transparency in online charges.

As part of the settlement, Amazon will not admit any wrongdoing. The company stated that it aims to enhance customer experience by implementing a more straightforward process for declining Prime subscriptions and simplifying cancellation procedures. The FTC noted that Amazon will also be required to provide clearer disclosures regarding subscription terms during the enrollment process and will fund an independent third-party supervisor to ensure compliance.

The settlement comes just days into a trial in Seattle, where the FTC presented evidence of Amazon's internal discussions about its subscription practices. The FTC chairman, Andrew Ferguson, stated, "The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription."

Amazon Prime, which offers benefits such as faster shipping, video streaming, and discounts at Whole Foods, has become a significant part of Amazon's business, boasting over 200 million members. The annual fee for Prime is currently $139, while the monthly fee is $14.99. In its latest financial report, Amazon reported more than $12 billion in net revenue from subscription services, reflecting a 12% increase from the previous year.

The FTC's investigation into Amazon's subscription practices began during the Trump administration and continued under President Biden. The agency's scrutiny of Amazon has intensified, with a separate investigation into the company's pricing policies currently underway in Canada. In 2017, Amazon faced a $1.1 million fine in Canada over unsubstantiated list prices.