New York
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Amazon is paying a historic $2.5 billion settlement with the Federal Trade Commission, the company introduced Thursday, ending a 2-year dispute over allegations the corporate tricked customers into signing up for its Prime subscription service after which made it onerous to cancel.
As a part of the settlement, Amazon will pay a $1 billion civil penalty and supply $1.5 billion in refunds to an estimated 35 million customers that had been “harmed by their deceptive Prime enrollment practices,” the company mentioned in a press launch.
The settlement comes just some days into a trial between the FTC and Amazon. The lawsuit was filed in 2023 below the Biden administration over the corporate’s cancellation insurance policies.
“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,” mentioned FTC Chairman Andrew 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,” he added.
Amazon (AMZN) didn’t instantly reply to remark. Shares had been flat following the information.
Amazon also can now not have a “No, I don’t want Free Shipping” button, the FTC mentioned. The firm wants to embrace “clear and conspicuous disclosures” concerning the phrases of Prime throughout enrollment course of and have “easy ways” to cancel this system.
Prime, which prices $14.99 per thirty days or $139 yearly, is a trademark of the corporate’s choices and generates billions of {dollars}. The service initially began as an add-on for quick supply. Since then, Prime has ballooned into a multi-pronged service that gives streaming leisure, grocery delivery, gas and meals supply perks, in addition to subscriber-only offers.