:max_bytes(150000):strip_icc()/GettyImages-2234419194-f4da5c6a34da4e79885f172314b5d6ab.jpg "You Might Be Getting Back From Amazon Soon. Here’s Why.")
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Key Takeaways
- Amazon in a settlement with the FTC agreed to pay a $1 billion penalty and even more in refunds to settle government claims alleging deceptive practices related to enrollment in and cancellation of the Prime subscription service.
- Customers meeting certain requirements will get more than $50 as part of the settlement.
Tech and retail giant Amazon agreed to pay billions of dollars in refunds and penalties to settle allegations of “deceptive” practices involving the Prime subscription service, the government said Thursday.
The company, among the world’s most valuable, agreed to pay a $1 billion civil penalty and $1.5 billion in refunds to customers, the FTC said. The government called the penalty the largest-ever civil penalty associated with an FTC violation; it resolves an action that began more than two years ago. Amazon did not admit wrongdoing as part of the settlement.
Amazon (AMZN) “used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription,” Federal Trade Commissioner Chair Andrew Ferguson said in a statement. Customers meeting certain requirements will get a $51 payment, according to court documents.
Why This Matters to Your Money
A $2.5 billion settlement looks comparatively small compared with Amazon’s market cap above $2 trillion. A $51 refund may not seem like much ahead of what could be sizable holiday shopping bills. The biggest takeaway for consumers may be a reminder to read the fine print when shopping online—or anywhere else—as merchants look to make it easier to spend.
The FTC in its statement said Amazon created “confusing and deceptive” interfaces that led consumers to enroll in Prime without knowing it and made it “complex and difficult” to quit the service. The company, the government said, agreed to make a button for declining Prime “clear and conspicuous” and to make it easy to cancel.
“We work incredibly hard to make it clear and simple for customers to both sign up or cancel their Prime membership, and to offer substantial value for our many millions of loyal Prime members around the world,” a spokesperson said in a statement. “We will continue to do so.”
Amazon’s Prime service, which includes shipping benefits along with streaming music and video offerings, costs about $15 a month or $140 a year. It is estimated to have some 200 million members worldwide.
