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FTC Secures $2.5 Billion Payout From Amazon in Prime Lawsuit

By  |  September 25, 2025

Amazon has agreed to a $2.5 billion settlement with the Federal Trade Commission (FTC) following accusations that the company misled millions of consumers into subscribing to its Prime program and made it difficult for them to cancel. According to a statement, the settlement was reached just days after a trial in Seattle began over the allegations, which were first brought in a 2023 FTC lawsuit.

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    The agreement includes $1 billion in penalties and $1.5 billion in compensation for customers. Eligible subscribers could receive $51 each, per The New York Times. The FTC described the deal as one of the largest settlements in its history. Amazon did not admit to any wrongdoing in accepting the terms, the agency confirmed.

    Prime has become a central part of Amazon’s business model, with an estimated 200 million U.S. users. Memberships, which cost $139 annually and include perks such as free shipping and access to streaming content, generated more than $44 billion in revenue last year. However, the FTC claimed that Prime’s true value for Amazon comes from the higher spending habits of its members, who purchase more frequently than non-subscribers.

    As part of the settlement, Amazon is prohibited from misrepresenting the terms of Prime and must secure clear consent from customers before charging subscription fees. The company will also be required to improve transparency around the program and provide a straightforward cancellation option.

    Read more: Amazon Faces FTC Challenge Over Prime Billing Practices

    Two senior executives — Jamil Ghani, head of Prime, and Neil Lindsay, a senior vice president in Amazon’s health division who previously oversaw Prime — were also named in the settlement. Both are barred from engaging in unlawful conduct tied to subscription practices, according to a statement.

    FTC Chairman Andrew Ferguson hailed the settlement as a “monumental win” and emphasized the agency’s role in protecting consumers. “The Trump-Vance FTC is committed to fighting back when companies try to cheat ordinary Americans out of their hard-earned pay,” Ferguson said in a statement.

    This fine ranks among the agency’s largest, second only to the $5 billion penalty imposed on Facebook, now Meta, in 2019 for privacy violations. Still, the $2.5 billion sum represents just a fraction of Amazon’s nearly $2.4 trillion market capitalization. Shares of the company rose slightly after the announcement.

    Launched in 2005, Prime has become one of the world’s most successful subscription services, with over 200 million members worldwide.

    Source: The New York Times