WASHINGTON: Amazon has agreed to pay 2.5 billion dollars to settle allegations that it used deceptive practices to enroll consumers into its Prime service.
The Federal Trade Commission’s lawsuit alleged the online retailer knowingly tricked customers into signing up for the annual subscription during the checkout process.
FTC Chairman Andrew Ferguson stated the settlement puts billions back into Americans’ pockets and ensures Amazon does not repeat these actions.
He added that the commission remains committed to fighting back when companies attempt to cheat ordinary citizens.
Amazon stated in its response that the company and its executives have always followed the law, allowing them to move forward and focus on customer innovation.
The retail giant admitted no wrongdoing as part of the settlement agreement.
Amazon also emphasised its hard work to make Prime membership sign-up and cancellation clear and simple for customers worldwide.
The settlement includes a 1.5 billion dollar payment into a consumer refund fund and a further 1 billion dollars in civil penalties.
Legal action focused on two primary claims involving non-consensual enrollment through confusing checkouts and an intentionally complex cancellation system.
Amazon’s checkout process allegedly forced customers to find small, inconspicuous links to decline Prime while using prominent buttons for sign-up.
The FTC further claimed that crucial information about pricing and automatic renewal was often hidden or disclosed in fine print.
Amazon must now reform its Prime enrollment and cancellation processes under the settlement terms.
These reforms include providing a clear option to decline membership and avoiding vague references like “no thanks, I don’t want free shipping.”
The company must also implement new disclosure requirements before charging consumers and always show the price and auto-renewal feature.
Amazon confirmed that many of these required changes have already been implemented.
A former FTC official from the Biden administration called the 2.5 billion dollar fine a drop in the bucket for the tech giant.
Ex-FTC chair Lina Khan said the settlement was undoubtedly a big relief for the executives named in the lawsuit.
Critics suggested the agreement came after Amazon found itself on the defensive during the legal proceedings.
The court delivered a pre-trial ruling last week that Amazon Prime subscriptions are subject to consumer protection laws.
This case forms part of a broader bipartisan effort to rein in the power of major US technology companies. – AFP
