September 26, 2025
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Will Amazon’s $2.5 Billion FTC Settlement Have a Negative Impact on Prime Subscriptions?
Amazon is slated to pay $2.5 billion to settle Federal Trade Commission allegations that it had fooled customers into Prime memberships due to “deceptive Prime enrollment practices,” as Retail Touchpoints outlined, only days after a jury trial over the matter had kicked off.
In particular, the complaint — originating in a June 2023 filing — claimed that Amazon and some key executives had violated the FTC Act and the Restore Online Shoppers’ Confidence Act.
“The evidence showed that Amazon used sophisticated subscription traps designed to manipulate customers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription,” Andrew Ferguson, chair of the FTC, said in a statement.
“Today, we are putting billions of dollars back into Americans’ pockets, and making sure Amazon never does this again,” Ferguson added.
Of the $2.5 billion settlement sum, $1 billion is earmarked as a civil penalty and $1.5 billion must be returned in refunds to customers who were affected.
Amazon Must Make Changes to Prime Membership as Result of FTC Settlement
Of note, Amazon must now make substantial changes to its Prime membership, including some of the following measures.
- There must be a “clear and conspicuous button” placement for customers to decline or refuse Prime. Express consent must be gained for activations in every case.
- There must be a full disclosure of all material terms of the Prime membership during the sign-up process, particularly the dates and frequency of associated charges, outlining of all subscription auto-renewals (notably, whether or not this feature is activated), and Amazon must foot the bill for an independent third-party supervisor to monitor compliance with “the consumer redress distribution process,” as Retail Touchpoints’ Adam Blair noted.
Per CNBC, an estimated 35 million customers were impacted by “unwanted Prime enrollment or deferred cancellation,” as the FTC indicated. The terms of the settlement suggest that about $51 will be credited to affected customers within 90 days.
In addition, two Amazon execs, worldwide VP of Amazon Prime Jamil Ghani and SVP of Amazon’s health division Neil Lindsay, are further prohibited from “unlawful conduct.”
Ferguson was quick to notch the settlement as a “monumental win” for the agency, bolstering its credentials in the realm of consumer advocacy and fairness in business.
“The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay,” Ferguson stated.
Blair cited Amazon spokesperson Mark Blafkin on the subject of the settlement, with Blafkin having provided a statement to The Information.
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers. 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. We will continue to do so, and look forward to what we’ll deliver for Prime members in the coming years,” Blafkin wrote.
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Discussion Questions
Will Amazon see a slowing of Prime subscriptions as a result of this settlement? Why or why not?
How much do consumers care about alleged deceptive practices when it comes to subscription services (Prime in particular)? Do you believe Amazon was transparent enough in its terms and disclaimers prior to this settlement?
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Amazon’s revenue from subscriptions totaled from $44.3 billion last year. So, in that context, the settlement of $2.5 billion is fractional and has no real impact. Amazon also changed its Prime cancellation processes a long time ago so there will be no sudden shift from anything on that front. Prime succeeds today because of the strength and value of the program, and I don’t see that changing as a result of this settlement.
For those who see this piddling settlement – what is it, 3 hrs of their profits? – as some kind of watershed in how Amazon operates, I have a great website for you: buyabridge.com (And yes, Amazon is probably their logistics partner 🙂 )
Amazon hooked new subscribers and made it hard for them to unsubscribe—really? Show me a company that doesn’t try to do that. Subscription friction is ubiquitous these days. Most consumers have come to expect that dropping a service will require some level of annoyance.
That said, I don’t sense widespread dissatisfaction with Prime. Quite the opposite—people like it. Amazon has done a solid job of extending value, and Prime Video is a great example.
This isn’t some new e-commerce thing either. I fell for the “twelve albums for a penny” deal more than once in my youth. And getting RCA or Columbia to let me go, even after I’d fulfilled the minimum purchase, was not easy. The model hasn’t changed—just the medium.
The reality is that this is where consumer advocates and companies will always clash. I don’t expect consumers to punish Amazon for being allegedly opaque. These days, opacity is expected. People weigh the value against the annoyance. If the benefits win, they stay.
I was thinking the same thing. Yes, show me the company that doesn’t try to do that. I have found that the smaller the online companies, the more duplicitous and brutal they are to deal with. Give me Amazon or Walmart for confidence in doing things right.
Amazon is unlikely to see a meaningful slowdown in Prime subscriptions following this FTC settlement. While the headlines and fine will generate negative publicity, Prime’s value equation—fast delivery, bundled content, discounts, and convenience—remains exceptionally strong. For most consumers, the utility of the program far outweighs frustrations over the enrollment process, making Prime feel more like a necessity than a luxury.
That said, the episode is a reminder that trust is one of Amazon’s most valuable assets. Consumers do care about deceptive practices, even if they tolerate them in the short term when the value proposition is compelling. If a similar breach of trust were to occur again, the reputational damage could be far more lasting, especially as competitors look for ways to challenge Amazon’s dominance.
Amazon has argued that many of the changes required by the FTC were already in place, but the very need for enforcement suggests transparency had fallen short. Going forward, the company must not only comply with new requirements but also lean into greater clarity and simplicity in how it communicates terms. Prime isn’t at risk today, but the long-term health of the brand depends on reinforcing consumer trust alongside delivering value.
Amazon is already doing quite a bit to decrease the value of a Prime subscription. Refusing to give into their holding good viewing hostage after adding ads, we were pummeled with ads the other night attempting to watch a movie on Prime. Far worse than attempting to watch a movie recorded on TiVO from Cable. As with other streamers, Amazon is making TV viewing worse and more expensive — with their Prime subscription attached. In reality, Amazon got off easy with this fine. In my opinion, serious antitrust issues remain but are unlikely to ever be dealt with.
This settlement won’t slow Prime subscription growth rates. If anything, more people will join Prime because Amazon ended the free shipping sharing perk and its convenience is addictive.
The settlement allows Amazon to reset the regulatory table, while competitors face the emboldened scrutiny of regulators. Amazon gets to a clean path forward, but the lesson here is that subscription services can’t ignore the importance of trust in digital commerce. I see little downside to Amazon’s Prime subscriptions; however, it’s essential to note that Amazon’s behavior is a sign of hitting Prime’s growth ceiling. Internally, the company focused on value extraction through friction (how to maintain lock-in) rather than through innovation (what can we add).
Ditto to Mohamed’s thoughts on reaching a ceiling- there are only so many folks available to capture in the program, and saturation of the market is real meaning a shift from market share to wallet share.
eCommerce continues to grow at ~10% and the need for Prime will only increase over time. Most of the changes that the settlement has mandated have already been made. So yes, there is a painful $2.5b hit but not much more strategically for the long term. And as big as $2.5b sounds, it’s only a 5% hit against subscription revenue this year. They will see little to no change.
I had to laugh at this part of the settlement. “There must be a full disclosure of all material terms of the Prime membership during the sign-up process, particularly the dates and frequency of associated charges, outlining of all subscription auto-renewals (notably, whether or not this feature is activated), and Amazon must foot the bill for an independent third-party supervisor to monitor compliance with “the consumer redress distribution process.”
Does anyone really read any disclosure? It will likely be longer and more comprehensive than before (the lawyers will write it), and as a result, even fewer people will read it.
I’m betting they do disclose it, somewhere in the pages and pages of small text we have to wade through when we sign up for something, or what feels like my annual scroll through change of conditions documents.
Amazon is unlikely to lose much revenue from its Prime service. The vast majority of customers seem to be satisfied with the value proposition and have no issues. Until Amazon starts to remove any of the most used and popular features, this remains a nothing burger.
From a business perspective, this outcome will have little impact to Amazon’s ability to land customers or continuing to grow an attractive Prime program. The opportunity will soon arise for Amazon to move to tiered services based on the needs that customers really want.
It’s good to see the FTC operating on behalf of citizens, but the impact of going after Amazon was more about checking off a win than inducing corporate change. The amount of “pain” is about 3.6% of 2024 Amazon revenue. Prime attracts subscribers for its offering and will be unhindered by this event.
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Amazon’s revenue from subscriptions totaled from $44.3 billion last year. So, in that context, the settlement of $2.5 billion is fractional and has no real impact. Amazon also changed its Prime cancellation processes a long time ago so there will be no sudden shift from anything on that front. Prime succeeds today because of the strength and value of the program, and I don’t see that changing as a result of this settlement.
For those who see this piddling settlement – what is it, 3 hrs of their profits? – as some kind of watershed in how Amazon operates, I have a great website for you: buyabridge.com (And yes, Amazon is probably their logistics partner 🙂 )
Amazon hooked new subscribers and made it hard for them to unsubscribe—really? Show me a company that doesn’t try to do that. Subscription friction is ubiquitous these days. Most consumers have come to expect that dropping a service will require some level of annoyance.
That said, I don’t sense widespread dissatisfaction with Prime. Quite the opposite—people like it. Amazon has done a solid job of extending value, and Prime Video is a great example.
This isn’t some new e-commerce thing either. I fell for the “twelve albums for a penny” deal more than once in my youth. And getting RCA or Columbia to let me go, even after I’d fulfilled the minimum purchase, was not easy. The model hasn’t changed—just the medium.
The reality is that this is where consumer advocates and companies will always clash. I don’t expect consumers to punish Amazon for being allegedly opaque. These days, opacity is expected. People weigh the value against the annoyance. If the benefits win, they stay.
I was thinking the same thing. Yes, show me the company that doesn’t try to do that. I have found that the smaller the online companies, the more duplicitous and brutal they are to deal with. Give me Amazon or Walmart for confidence in doing things right.
Amazon is unlikely to see a meaningful slowdown in Prime subscriptions following this FTC settlement. While the headlines and fine will generate negative publicity, Prime’s value equation—fast delivery, bundled content, discounts, and convenience—remains exceptionally strong. For most consumers, the utility of the program far outweighs frustrations over the enrollment process, making Prime feel more like a necessity than a luxury.
That said, the episode is a reminder that trust is one of Amazon’s most valuable assets. Consumers do care about deceptive practices, even if they tolerate them in the short term when the value proposition is compelling. If a similar breach of trust were to occur again, the reputational damage could be far more lasting, especially as competitors look for ways to challenge Amazon’s dominance.
Amazon has argued that many of the changes required by the FTC were already in place, but the very need for enforcement suggests transparency had fallen short. Going forward, the company must not only comply with new requirements but also lean into greater clarity and simplicity in how it communicates terms. Prime isn’t at risk today, but the long-term health of the brand depends on reinforcing consumer trust alongside delivering value.
Amazon is already doing quite a bit to decrease the value of a Prime subscription. Refusing to give into their holding good viewing hostage after adding ads, we were pummeled with ads the other night attempting to watch a movie on Prime. Far worse than attempting to watch a movie recorded on TiVO from Cable. As with other streamers, Amazon is making TV viewing worse and more expensive — with their Prime subscription attached. In reality, Amazon got off easy with this fine. In my opinion, serious antitrust issues remain but are unlikely to ever be dealt with.
This settlement won’t slow Prime subscription growth rates. If anything, more people will join Prime because Amazon ended the free shipping sharing perk and its convenience is addictive.
The settlement allows Amazon to reset the regulatory table, while competitors face the emboldened scrutiny of regulators. Amazon gets to a clean path forward, but the lesson here is that subscription services can’t ignore the importance of trust in digital commerce. I see little downside to Amazon’s Prime subscriptions; however, it’s essential to note that Amazon’s behavior is a sign of hitting Prime’s growth ceiling. Internally, the company focused on value extraction through friction (how to maintain lock-in) rather than through innovation (what can we add).
Ditto to Mohamed’s thoughts on reaching a ceiling- there are only so many folks available to capture in the program, and saturation of the market is real meaning a shift from market share to wallet share.
eCommerce continues to grow at ~10% and the need for Prime will only increase over time. Most of the changes that the settlement has mandated have already been made. So yes, there is a painful $2.5b hit but not much more strategically for the long term. And as big as $2.5b sounds, it’s only a 5% hit against subscription revenue this year. They will see little to no change.
I had to laugh at this part of the settlement. “There must be a full disclosure of all material terms of the Prime membership during the sign-up process, particularly the dates and frequency of associated charges, outlining of all subscription auto-renewals (notably, whether or not this feature is activated), and Amazon must foot the bill for an independent third-party supervisor to monitor compliance with “the consumer redress distribution process.”
Does anyone really read any disclosure? It will likely be longer and more comprehensive than before (the lawyers will write it), and as a result, even fewer people will read it.
I’m betting they do disclose it, somewhere in the pages and pages of small text we have to wade through when we sign up for something, or what feels like my annual scroll through change of conditions documents.
Amazon is unlikely to lose much revenue from its Prime service. The vast majority of customers seem to be satisfied with the value proposition and have no issues. Until Amazon starts to remove any of the most used and popular features, this remains a nothing burger.
From a business perspective, this outcome will have little impact to Amazon’s ability to land customers or continuing to grow an attractive Prime program. The opportunity will soon arise for Amazon to move to tiered services based on the needs that customers really want.
It’s good to see the FTC operating on behalf of citizens, but the impact of going after Amazon was more about checking off a win than inducing corporate change. The amount of “pain” is about 3.6% of 2024 Amazon revenue. Prime attracts subscribers for its offering and will be unhindered by this event.