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The Federal Trade Commission took Amazon to court early last week. Only two days after the trial started, Amazon caved in to sign a $2.5 billion settlement.
At the heart of the lawsuit was the Amazon Prime subscription program. The FTC claimed that Amazon tricked millions of customers into signing up for a Prime membership using deceptive design techniques and then made the cancellation process onerously difficult.
The $2.5 billion settlement is made up of a $1 billion civil penalty paid to the government, the largest ever involving an FTC rule violation, and $1.5 billion in refunds to affected consumers, the second-highest restitution award ever obtained by the FTC.
“Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again,” FTC Chairman Andrew N. Ferguson said in a press release.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” Amazon spokesperson Mark Blafkin told Gizmodo.
The FTC estimates that roughly 35 million consumers were impacted by this scheme. Chances are, you could be one of the 35 million, and you could be eligible to benefit from the refunds totaling a record-breaking $1.5 billion.
For starters, you have to be a customer in the United States who signed up for an Amazon Prime membership or unsuccessfully tried to cancel an existing Prime subscription some time between June 23, 2019, and June 23, 2025.
But even then, you had to have signed up via what the FTC calls a “challenged enrollment flow,” aka a misleading enrollment page. According to the FTC, you are eligible for a claims payout if you signed up for a Prime membership via the shipping option selection page (that is, if you clicked to have free shipping without realizing that meant registering for a Prime membership), Prime Video, or any versions of the Universal Prime Decision Page or Amazon’s single page checkout.
The first set of payouts will be made automatically within 90 days of the FTC order. If you signed up for an Amazon Prime membership using the challenged enrollment flow and used no more than three Prime benefits within any 12-month period of your enrollment, then you will be automatically qualified for a payout. Prime benefits do include free, expedited shipping unless the transaction at hand would have already included that speed of shipping for free without a Prime membership.
Once the first round of automatic claims payouts is done, Amazon will send out a claims form within 30 days to other eligible customers. This second wave will include people who tried to cancel Prime unsuccessfully and those who signed up via a challenged enrollment flow but used up to 10 Prime benefits over any 12-month period. Once you receive the form, you will have up to 180 days to submit it back to Amazon via email, pre-paid mail, or a settlement website, which Amazon has yet to establish. Once you submit your claim, Amazon will have only 30 days to review and issue your refund.
Amazon is required to refund affected customers the total amount of Amazon Prime membership fees paid during their entire subscription period, but the refunds will be capped at $51 per customer. A standard Prime membership currently costs $14.99 a month or $139 annually.
If by the end of the two waves of claims payouts, Amazon has paid less than $1 billion in funds, then the tech giant is required to send more automatic payouts until the threshold is reached. For example, if necessary, Amazon will start issuing automatic refunds to customers who fit all other automatic payout requirements but used up to four Prime benefits in a 12-month period and failed to submit a claim in time.
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Source: Gizmodo