• Amazon will pay $2.5 billion to settle FTC allegations regarding deceptive Prime subscription practices.
• The settlement includes $1 billion in civil penalties and $1.5 billion for customer refunds.
• Approximately 35 million customers may receive refunds due to complications with subscription cancellation.

Amazon has agreed to pay $2.5 billion to settle allegations from the Federal Trade Commission (FTC) that it misled consumers into enrolling in its Prime membership and made cancellation processes excessively complicated. The settlement, announced following a trial set to begin, represents the largest civil penalty ever secured by the FTC for a complaint involving consumer protection violations, according to FTC Chairman Andrew Ferguson who stated, "Today, we are putting billions of dollars back into Americans' pockets" NPR, Reuters.

The settlement consists of a $1 billion civil penalty to the FTC and $1.5 billion allocated for refunds to consumers who were misled or had difficulty canceling their Prime subscriptions CBS News, Business Insider. Since June 2019, around 35 million customers reportedly affected are eligible for refunds, which will be processed automatically for those who signed up through specific pathways SFGate.

The FTC's lawsuit accused Amazon of employing manipulative user-interface designs that coerced customers into subscribing to Prime while creating a "deliberate maze" for cancellation, which was internal dubbed "Iliad" due to its complexity Le Monde, Los Angeles Times. As part of the agreement, Amazon agreed to reform its subscription practices by providing clearer options to decline Prime membership Bangkok Post, India Times.

Despite the settlement, Amazon continues to assert that it has not committed any wrongdoing. The company claims to have taken steps to improve clarity in its subscription and cancellation processes long before the lawsuit South China Morning Post, Al Jazeera.