A historic order has been obtained by the Federal Trade Commission from Amazon.com, Inc., Senior Vice President Neil Lindsay, and Vice President Jamil Ghani.
This order resolves claims that Amazon knowingly made it difficult for customers to cancel Prime subscriptions and enrolled millions of customers without their consent.
Amazon will have to pay a $1 billion civil penalty, stop its illegal Prime enrollment and cancellation practices, and return $1.5 billion in refunds to customers who were damaged by its dishonest Prime enrollment methods.
“For the millions of Americans who are fed up with misleading subscriptions that seem impossible to cancel, the Trump-Vance FTC made history today and secured a record-breaking, monumental win,” FTC Chairman Andrew N. Ferguson said.
In order to trick customers into signing up for Prime, Amazon employed sophisticated subscription traps, which made it extremely difficult for customers to cancel their membership.
We are ensuring that Amazon never does this again and reinvesting billions of dollars in the lives of Americans today.
When corporations attempt to defraud regular Americans of their hard-earned wages, the Trump-Vance FTC is determined to take action.
Amazon and a number of Amazon officials have been accused by the FTC of intentionally deceiving millions of customers into signing up for Prime, in violation of both the FTC Act and the Restore Online Shoppers’ Confidence Act.
Amazon allegedly designed perplexing and misleading user interfaces to trick customers into signing up for Prime without their awareness, according to the FTC.
Amazon made the process of canceling a Prime membership complicated and challenging for customers in an effort to discourage them from doing so, which furthered these dishonest enrollment tactics.
According to Amazon documents uncovered during the trial, executives and staff members of the company intentionally discussed these illegal enrollment and cancellation issues, saying things like “subscription driving is a bit of a shady world” and “leading consumers to unwanted subscriptions is an unspoken cancer.”
Only three ROSCA cases have resulted in the FTC receiving a civil penalty, including the historic monetary judgment included in the settlement.
It consists of:
$1 billion in consumer redress, which would fully compensate the estimated 35 million customers affected by undesired Prime enrollment or deferred cancellation; and
a $1 billion civil penalty, the most ever in a case involving an FTC rule violation.
In the history of FTC action, this is the second-highest restitution award.
The settlement also mandates that Amazon cease its illegal activities and significantly alter the Prime enrollment and cancellation processes by:
-the display of a prominent and obvious button for users to reject Prime.
A button that reads, “No, I don’t want Free Shipping,” is no longer allowed on Amazon.
-providing explicit and noticeable disclosures during the Prime enrollment process regarding the relevant conditions of Prime, including the price, the date and frequency of payments to customers, whether the subscription would automatically renew, and how to cancel.
-establishing a simple way for customers to terminate Prime using the same process they used to sign up.
The procedure must be accessible using the same way that customers used to sign up and cannot be time-consuming, expensive, or complex; and
-funding a third-party, independent supervisor to keep an eye on Amazon’s adherence to the consumer redress distribution process.
The Commission approved the final order with a vote of 3-0. The FTC submitted the proposed order to the Western District of Washington U.S. District Court.
