Amazon to pay $2.5 billion to settle allegations of cheating Prime customers
The Federal Trade Commission (FTC) lawsuit, filed in federal court in Seattle, alleges that Amazon knowingly deceived consumers into signing up for the $139-a-year Prime service during the checkout process.
Amazon headquarters/Alfredo Estrella.
Amazon agreed Thursday to pay $2.5 billion to settle allegations by a U.S. regulator that it engaged in deceptive practices to sign up consumers for Amazon Prime.
The Federal Trade Commission (FTC) lawsuit, filed in federal court in Seattle, alleges that Amazon knowingly misled consumers into signing up for the Prime service, at a fee of $139 per year, during the checkout process.
"Today, we are putting billions of dollars back into Americans' pockets, and making sure Amazon never does this again," FTC Chairman Andrew Ferguson said in a statement.
On another note, Amazon stated that the company and its executives have always abided by the law, and that this settlement allows them to move forward and focus on innovation for their customers.
The e-commerce giant, which did not admit to any wrongdoing, added that it has worked hard to make it simple and transparent for its customers to sign up for or cancel their Prime membership, and to offer added value to its millions of Prime members worldwide.
The settlement represents one of the FTC's largest financial recoveries in a consumer protection case.
The case centers on two main allegations: that Amazon signed up customers without their explicit consent through confusing payment processes, and that it created a deliberately complex cancellation system, internally dubbed the "Iliad," after Homer's epic about the long and arduous Trojan War.
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The FTC claims that Amazon's checkout process forces customers to navigate confusing interfaces where, to decline Prime membership, it was necessary to find small, unobtrusive links while signing up for the service involved prominent buttons.
It also claims that crucial information about Prime pricing and automatic renewal was often hidden or disclosed in small print.
Under the agreement, Amazon will have to reform its Prime enrollment and cancellation processes, including clear rejection options and simplified cancellation procedures.
It will likewise have to implement new disclosure requirements before charging consumers.
The company neither admits nor denies wrongdoing
In the proposed settlement, filed before the third day of testimony in the Seattle court, the company neither admits nor denies wrongdoing.
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