The Federal Trade Commission has announced a sweeping settlement with Amazon.com and two Amazon executives, resolving allegations that Amazon used misleading design tactics to enroll millions of consumers into Prime subscriptions and obstructed efforts to cancel them.

Under the settlement:

• Amazon will pay a $1 billion civil penalty (the largest ever in an FTC rule-violation case).

• Amazon will provide $1.5 billion in consumer redress — full refunds or credits to roughly 35 million affected customers.

• Amazon is ordered to reform its subscription UI design and cancellation paths, including:
    • a “clear and conspicuous” button allowing consumers to decline Prime (replacing euphemistic labels such as “No, I don’t want Free Shipping”)
    • full upfront disclosure of cost, renewal frequency, and cancellation terms at the time of enrollment
    • cancellation must be allowed via the same method the consumer used to enroll, and the cancellation flow must not be more burdensome than enrollment

• Amazon must also pay for an independent, third-party supervisor to oversee compliance with the redress distribution and ensure adherence to the new rules.

The settlement resolves claims that Amazon violated the FTC Act and the Restore Online Shoppers’ Confidence Act (ROSCA), by engaging in deceptive subscription enrollment practices and deliberately sabotaging cancellation.

FTC Chairman Andrew N. Ferguson emphasized that Amazon deployed “sophisticated subscription traps designed to manipulate consumers into enrolling in Prime, and then made it exceedingly hard for consumers to end their subscription.”

Amazon does not admit wrongdoing under the agreement. The settlement must now be approved and entered by the U.S. District Court for the Western District of Washington.

INSIDER TAKE

What Subscription Executives Should Be Watching

1. Design neutrality is no longer optional

This settlement sends a clear signal: user interface design cannot favor enrollment over cancellation. Subscription businesses that embed friction, dark patterns, or asymmetries between “sign up” and “opt out” will find themselves under scrutiny. The FTC’s stance raises the bar: cancellation flows must be at parity with enrollment flows.

2. Transparency is legally enforceable

It’s no longer sufficient to bury terms in fine print or secondary screens. Businesses must disclose cost, auto-renewal terms, and cancellation procedures at the moment of enrollment in a clear, conspicuous manner. That’s now part of binding law (at least for Prime). Expect similar expectations to diffuse across other sectors.

3. Independent compliance oversight will become a template

Requiring a third-party supervisor to monitor distribution and compliance is a serious escalation in regulatory enforcement. Subscription services should anticipate that regulators may increasingly demand external audit, reporting, or oversight in high-risk settings.

4. Premium brands won’t be immune

Amazon’s size or dominance didn’t shield it from this settlement. Subscription companies of all sizes should take note: the FTC is willing to push for sweeping enforcement where it views systemic harm in subscription markets.

5. Elevated risk in “free trial to paid conversion” taps

Though the FTC’s press release emphasizes “deceptive enrollment and cancellation,” much of the same risk applies to how free trials convert to paid plans. If a company entices trial users with tools that obscure cancellation or sneakily shift opt-in defaults, it may invite scrutiny in light of this precedent.

6. Consumer redress scales to the scope

Amazon is funding $1.5 billion in refunds to affected users — a scale many subscription businesses can’t match. But the principle is clear: when a regulatory agency finds a violation, the expectation is for full consumer relief, not symbolic gestures.

7. Watch for expansion to other platforms/subscription verticals

Though this action is about Amazon Prime, the logic and legal arguments can be extended. Video, software (SaaS), streaming, digital content, membership clubs — all subscription models need to audit their design and cancel logic in anticipation of broader enforcement.