The US Federal Trade Commission (FTC) has secured a $2.5 billion settlement with Amazon for deceptive enrolment and cancellation practices in its Prime subscription service. The settlement includes a $1 billion civil penalty, which is the largest ever for an FTC rule violation, and $1.5 billion in refunds to nearly 35 million consumers. Senior executives Neil Lindsay and Jamil Ghani were also named.
The Commission approved the order unanimously with a 3-0 vote and filed it in the US District Court for the Western District of Washington on September 25, 2025. Once the district judge approves it, the order will carry the force of law.
Key Details
The FTC alleged that Amazon used manipulative “dark patterns” to sign users up for Prime without consent and then made cancellation deliberately difficult. Moreover, these practices violated both the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA).
Internal Amazon documents revealed during the case showed that executives were aware of these tactics. Employees described subscription driving as “a shady world” and unwanted enrollments as “an unspoken cancer”. Furthermore, FTC Chair Andrew N. Ferguson stated that the evidence proved Amazon relied on sophisticated subscription traps designed to lock in customers and obstruct cancellation.
Settlement Terms
The settlement imposes significant financial penalties and strict behavioral requirements on Amazon. Specifically, the order requires Amazon to:
- Provide a clear and visible “Decline Prime” button, without manipulative wording such as “No, I don’t want free shipping.”
- Disclose all material terms during sign-up, including cost, billing frequency, auto-renewal, and cancellation procedures.
- Ensure that cancellation is as simple as sign-up, using the same method the consumer originally used.
- Pay for an independent third party to oversee refund distribution and monitor compliance.
Additionally, the settlement highlights that design changes are not optional adjustments but legally binding requirements.
Background and Context
The FTC filed the case in June 2023 under former head Lina Khan. At the time, Khan said Amazon had tricked and trapped consumers into recurring subscriptions and caused significant financial harm.
A central focus of the lawsuit was the “Iliad Flow”, Amazon’s internal name for its Prime cancellation process. For context, cancelling Prime required navigating four pages, six clicks, and fifteen separate options. The FTC argued this design was intentionally frustrating to discourage cancellation.
Additionally, the complaint highlighted several other dark patterns:
- Prime Video vs full Prime: Consumers who wanted only Prime Video were defaulted into the full Prime bundle. The cheaper Prime Video-only option appeared in a small grey link while the large confirm button highlighted the full Prime plan.
- Hidden auto-renewal: Free trial promotions…
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