Amazon Reaches $2.5 Billion Settlement With FTC Over Prime Subscription Case: Report

Amazon.com Inc. (AMZN) has reportedly reached a $2.5 billion settlement with the Federal Trade Commission (FTC), resolving allegations that the company misled consumers into paying for the Prime service. 

According to a CNBC report, the agreement comes at a time when the company and the FTC were three days into the trial in a Seattle courtroom, with the opening arguments having been made on Tuesday. The court proceedings were expected to last a month, the report added.

Amazon.com stock inched 0.3% lower on Thursday mid-morning. On Stocktwits, retail sentiment around the stock remained in ‘extremely bullish’ territory amid ‘extremely high’ message volume levels. 

The report noted that the FTC filed the lawsuit in June 2023, alleging that Amazon used deceptive tactics to push millions of customers into Prime subscriptions and obstructed attempts to opt out. 

“Today, the Trump-Vance FTC made history and secured a record-breaking, monumental win for the millions of Americans who are tired of deceptive subscriptions that feel impossible to cancel,” said FTC Chairman Andrew N. Ferguson. “The evidence showed that Amazon used sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription.

Under the terms, Amazon will pay a $1 billion civil fine to the FTC and return $1.5 billion to around 35 million consumers who were enrolled in Prime without consent or faced hurdles in canceling. 

Amazon.com stock has gained over 14% in the last 12 months. 

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