The company will pay $1 billion in civil penalties and will refund $1.5 billion to customers to resolve allegations that it misled millions of customers into signing up for Prime and then making it intentionally difficult to cancel, according to court records.
FTC Chairman
“Amazon and our executives have always followed the law and this settlement allows us to move forward and focus on innovating for customers,” company spokesperson Mark Blafkin said in a statement.
In a ruling last week, however US District Judge John Chun found that Amazon’s conduct was illegal when it collected customers’ billing information before fully disclosing Prime’s terms. Chun had left it to a jury to decide whether the rest of the company’s conduct at issue violated the law in a trial that had started in Seattle Monday.
In a subsequent statement, Amazon said the company had already changed its processes, without specifying any details.
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The FTC, which enforces antitrust and consumer protection laws, sued Amazon and three executives in 2023 saying Amazon’s tactics violated a 2010 law designed to protect online shoppers. As part of the settlement, Amazon and two of its executives,
The largest US tech companies have been cozying up to the White House since President
The FTC case against Amazon focused on the company’s Prime subscriptions, which are a key part of Amazon’s success, with members spending more money and shopping more frequently than non-members.
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The FTC called the settlement “historic” and it ranks as one of the largest in the agency’s history. Under the terms of the settlement, Amazon customers will receive refunds of as much as $51.
Prime members pay $139 a year, or $15 per month, for shipping discounts, video streaming and other benefits. About 196 million people in the US had Prime memberships as of March, up 9% from a year earlier, according to market research firm Consumer Intelligence Research Partners. The figure reflects the number of people in the US living in households with Prime subscriptions, which are often shared by family members, and not the number of subscriptions sold.
Amazon had $12.2 billion in subscription services revenue, mostly from Prime memberships sold globally, in the quarter ended June 30, up 11% from the same period a year earlier.
The settlement came three days after the two sides picked a nine-person jury to decide whether Amazon and the executives were liable. The company could have faced penalties and refunds in the multiple billions of dollars if it lost at trial.
(Updates with subsequent Amazon statement in sixth paragraph.)
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