The U.S. Federal Trade Commission (FTC) accused Amazon of using deceptive signup practices and making it excessively difficult for customers to cancel their Prime subscriptions. In a settlement announced on September 25, 2025, Amazon agreed to pay $2.5 billion. Of this, $1.5 billion will go directly to affected customers, while $1 billion will serve as a civil penalty.

The FTC argued that Amazon enrolled many customers into Prime without obtaining clear consent. The company also used a complex cancellation process internally referred to as “Iliad.”

Refunds for Many, Claims for Others

Customers who joined Prime between June 23, 2019, and June 23, 2025, may be eligible for refunds. Under the settlement:

• Amazon will automatically refund $51 to customers who were signed up through deceptive flows and used Prime only a limited number of times.
  
  
• Customers who used Prime more frequently or had more complicated account histories will be able to file claims to seek partial refunds.
  
  

The settlement is expected to impact more than 30 million customers.

What Amazon Has to Change

The financial settlement is only one part of the agreement. The FTC has also mandated structural reforms at Amazon.

• Clear and visible options such as “Decline Prime” or “No, thanks” must be displayed during signup or purchase.
  
  
• The Prime membership cancellation process must be overhauled to make it simple, accessible, and transparent.
  
  
• Amazon and two key executives are prohibited from continuing the unlawful enrollment or cancellation practices.

Amazon released a statement emphasizing that it believes it acted within the law and clarified that the settlement does not represent an admission of wrongdoing.

What This Means for Customers

Prime customers during the affected period can expect Amazon to reach out with refund details or claim forms. Automatic refunds will begin rolling out in straightforward cases, while others may require claims to be filed.

In the longer term, the settlement aims to make subscription processes more transparent. It seeks to eliminate so-called “dark patterns” that push customers into services they did not knowingly choose or make it unnecessarily difficult to unsubscribe.

For Amazon, the $2.5 billion settlement represents a substantial financial outcome, though manageable for a company of its size. However, the reputational impact and the new compliance requirements carry significant weight.

A Bigger Trend

This case reflects a broader movement. Regulators worldwide have been closely examining technology companies for unclear subscription practices and interface designs that influence customer behavior unfairly. Amazon now joins a growing list of firms that have faced penalties or new rules for how they handle signups, renewals, and cancellations.

The settlement highlights a turning point. Amazon is required to provide direct refunds, simplify Prime cancellations, and operate under increased scrutiny. For customers, it signals a shift toward fairer subscription management and greater accountability from major corporations.